Texas Insurance Compliance
Texas General Liability Insurance for Contractors
General Liability insurance is the foundation of coverage for every Texas contractor. It protects your business against third-party claims of bodily injury and property damage arising from your operations, and it is the policy every general contractor, project owner, and commercial lease requires before you can step on site. Whether you are a sole proprietor bidding your first residential job or a general contractor managing a commercial build-out, understanding how GL coverage works — and exactly what endorsements Texas GCs require — is essential to staying compliant and protected.
What General Liability Covers
A commercial general liability (CGL) policy responds to third-party claims that arise from your business operations. For a Texas contractor, that means four core exposures: bodily injury to a customer or bystander, property damage to someone else's property, personal and advertising injury, and products and completed operations — claims that surface after your work is finished. GL pays for medical costs, repair bills, and your legal defense when you are sued, up to your policy limits. It does not cover damage to your own work, your own tools, or your employees' injuries — those require separate coverage like inland marine, workers' comp, or a professional liability policy.
Bodily Injury Coverage
Bodily injury coverage pays when a third party is physically hurt as a result of your operations. On a Texas job site, that means a customer who trips over your extension cord, a passerby struck by falling material, or a subcontractor's employee injured by your crew's work. The coverage pays medical expenses, lost wages, and damages if you are sued, and it covers your legal defense even if the suit is groundless. Texas heat and tight urban job sites in Houston, Dallas, and Austin raise the frequency of these claims, which is why GL limits and the quality of the carrier matter.
Property Damage Coverage
Property damage coverage pays when your operations damage someone else's property. A ladder through a window, a forklift that clips a parked vehicle, a trenching crew that severs a utility line, or a plumber's failed joint that floods a finished home — all are property-damage claims. GL pays to repair or replace the third-party property and defends you if you are sued. It does not pay to redo your own faulty installation, but it should cover the resulting damage to the customer's property caused by that faulty work.
Products and Completed Operations
Completed operations is the most important coverage for a contractor, because construction defect claims routinely surface months or years after you leave the site. A roof leak discovered 18 months after handover, an electrical defect that causes a fire, or a foundation that cracks after the first Texas summer are all completed-operations claims. Your GL policy must include products and completed operations coverage, and the policy should not cap it with a short sunset — many defect claims surface in the second or third year. A policy that quietly limits completed operations to 12 months can leave you uninsured exactly when the call comes.
Damage to Premises Rented to You
If you lease a yard, warehouse, or office, or you occupy a portion of a project under a lease, the "damage to premises rented to you" coverage pays if you cause fire or other damage to that leased space. This is a separate sublimit (commonly $100,000 to $300,000, sometimes $1M) within your GL. For contractors who lease yard space or operate out of a leased warehouse, confirm the sublimit matches the value of the space you occupy and the lease's insurance requirement.
Medical Payments
Medical payments coverage pays for minor medical expenses incurred by a non-employee third party injured on your premises or at your operations, regardless of fault — typically a small sublimit (often $5,000 to $25,000). It is designed to resolve small injuries quickly without escalating into a lawsuit. It does not apply to your employees; that is workers' comp. Medical payments is a goodwill coverage that frequently prevents a minor incident from becoming a full liability claim.
$1M / $2M Coverage Limits
The Texas construction standard is $1 million per occurrence and $2 million aggregate — written as $1M/$2M. "Per occurrence" is the most the policy will pay for any single incident; "general aggregate" is the most it will pay for all incidents during the policy period. Most GCs and commercial project owners require this minimum to allow a subcontractor on site. Mid-size commercial and multi-family work often requires $2M per occurrence, and large commercial or public work is commonly layered with an umbrella or excess policy to reach $5M–$10M in total limits. Carrying only the minimum on every job is a mistake — match your limits to your contract requirements and to the size of the claims your trade can generate.
Additional Insured Endorsements
An additional insured endorsement extends your GL coverage to another party — almost always the general contractor and the project owner — so that their business is protected under your policy if a claim arises from your work. Texas commercial contracts require additional insured status, and the endorsement must be on the policy itself, not just typed onto the certificate. A COI that lists "Additional Insured" as a checkbox without naming the endorsement form is weak protection and increasingly rejected.
CG 20 10 vs. CG 20 37
These are the two additional-insured endorsement forms Texas GCs verify. CG 20 10 extends additional-insured status to your ongoing operations — incidents that occur while the work is being performed. CG 20 37 extends additional-insured status to completed operations — defect and damage claims that surface after you leave the site. Because construction defect claims routinely arise after completion, more Texas owners now require both endorsements. A subcontractor who provides only CG 20 10 leaves the GC unprotected against the post-completion claims that are the most expensive in construction.
Waiver of Subrogation
After your GL pays a claim caused by a subcontractor, your carrier has the right to "subrogate" — step into your shoes and sue the responsible sub to recover the payout. A waiver of subrogation surrenders that right. Owners require waivers throughout the contracting chain so that each policy pays from the top down without the carriers suing each other. The waiver is a standard endorsement on Texas commercial COIs; a certificate missing it will be sent back, and on a tight bid timeline that can cost you the job.
Primary & Non-Contributory
This wording forces your GL policy to respond first and in full before the GC's or owner's policy contributes anything. Without primary and non-contributory language, an owner's policy could be dragged into a claim your work caused, which is exactly what they buy insurance to avoid. Texas commercial contracts now treat primary/non-contributory as standard — a subcontractor whose COI lacks it will not pass the compliance review and will not mobilize.
Per Project Aggregate
A per-project aggregate sets a separate general aggregate limit that applies only to a single named project, so claims arising on that job cannot erode the aggregate available for all your other work. Large commercial and public project owners frequently require a per-project aggregate (often added via an endorsement such as CG 21 55) to protect the limits dedicated to their project specifically. If you bid large commercial work, plan for this endorsement — it can affect premium and the carrier's willingness to quote.
Certificates of Insurance
The Certificate of Insurance (COI) is the document you deliver to prove your coverage meets the contract requirements. On it, the GC verifies your limits, your additional-insured status and the endorsement forms, your waiver of subrogation, and your primary/non-contributory wording. A COI that lists only generic coverage without the named endorsements is increasingly rejected. Deliver the COI before mobilization — most Texas contracts condition site access on a compliant certificate, and starting work without one can void your contract and shift liability.
Subcontractor Insurance Requirements
If you are a general contractor, your own GL is only half the equation — the other half is the insurance you require from every subcontractor. A single sub with a lapsed or under-endorsed policy can expose your GL to a claim that should have been theirs. Enforce a written requirement for at least $1M/$2M, additional insured via CG 20 10 and CG 20 37, waiver of subrogation, primary/non-contributory, and workers' comp with employer liability. Collect every COI before mobilization, verify the endorsements, and track every expiration date so no sub policy lapses mid-project.
Common Texas Contractor Requirements
- General Liability at $1M/$2M minimum; $2M/$2M or $2M/$4M on larger commercial work.
- Additional Insured on the policy via CG 20 10 and, for most commercial work, CG 20 37.
- Waiver of subrogation in favor of the GC and owner.
- Primary and non-contributory wording.
- Per-project aggregate on large commercial and public work.
- Workers' compensation with employer liability, even though Texas does not mandate it.
- Commercial auto with adequate limits and hired/non-owned coverage.
- Umbrella or excess layers of $5M–$10M for large projects.
Factors That Affect Your GL Premium
GL premiums are built from a base rate applied to your payroll and subcontractor cost, then modified by your trade classification, your claims history, and your contract profile. High-risk trades like roofing and framing carry higher base rates than painting or finish carpentry. Your class code determines the rate per $1,000 of exposure, and a clean loss history earns premium credits while frequent claims trigger surcharges. The residential-vs-commercial mix, new-construction-vs-service-repair split, and Texas weather exposure (wind, hail, heat) all factor in. Premiums are audited at policy end against actual payroll and subcontractor cost, so underreporting produces a large additional-premium bill. The single most effective way to lower GL premium is to collect COIs from every 1099 subcontractor and name yourself additional insured — properly insured sub cost can be removed from your base, which is a direct premium savings, not just paperwork.
Frequently Asked Questions
How much general liability insurance do Texas contractors need?
Most Texas general contractors and project owners require subcontractors to carry at least $1 million per occurrence and $2 million aggregate ($1M/$2M). Mid-size commercial and multi-family projects commonly require $2M per occurrence with a $2M or $4M aggregate, and large commercial or public work is often layered with a $5M–$10M umbrella or excess policy to reach the project owner's total-limit requirement.
What is an additional insured and why do GCs require it?
An additional insured endorsement extends your general liability coverage to another party — typically the general contractor and project owner — so their business is protected under your policy if a claim arises from your work. Most Texas commercial contracts require additional insured status via the CG 20 10 form (ongoing operations) and/or the CG 20 37 form (completed operations). Without it, your certificate of insurance will be rejected and you will not be allowed on site.
What is the difference between CG 20 10 and CG 20 37?
CG 20 10 extends additional-insured status to your ongoing operations — incidents that happen while you are performing the work. CG 20 37 extends additional-insured status to completed operations — defect and damage claims that surface after you leave the site. Because many construction defect claims arise months or years after completion, project owners increasingly require both endorsements.
What is a waiver of subrogation and why is it required?
A waiver of subrogation prevents your insurance carrier, after paying a claim, from stepping into your shoes and suing the general contractor or project owner to recover the payout. Owners require it so the entire chain of insurance pays from the top down without litigation between the parties. A COI missing the waiver of subrogation will be sent back.
What does primary and non-contributory mean?
Primary and non-contributory wording forces your general liability policy to pay first, before the GC's or owner's policy contributes anything. Without it, the owner's policy could be pulled into a claim your work caused. Texas commercial contracts now treat primary/non-contributory as standard — if a subcontractor's COI lacks this wording, it gets rejected.
What is a per-project aggregate and when do I need it?
A per-project aggregate (often added via an endorsement such as CG 21 55 or similar) sets a separate general aggregate limit that applies only to a single named project, so claims on one job do not erode the aggregate available for all your other work. Many large commercial and public project owners require a per-project aggregate to protect their job specifically.
Does general liability cover damage to my own work?
No. General liability covers third-party bodily injury and property damage caused by your operations and completed operations — including resulting damage to a customer's property — but it does not pay to redo your own faulty workmanship. Covering the cost to re-perform your defective installation requires a builder's risk or a professional/contractor warranty approach, not GL.
What subcontractor insurance requirements should a Texas GC enforce?
Collect a certificate of insurance from every subcontractor before they mobilize, verify at least $1M/$2M GL, confirm the GC and owner are named additional insured via CG 20 10 and CG 20 37, confirm waiver of subrogation and primary/non-contributory wording, verify workers' comp with employer liability, and track every expiration date so no sub policy lapses mid-project.
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