Business Insurance Requirements for General Contractors in Texas

Texas has a resilient housing market that quickly rebounded from recent punishing hurricane seasons. Rebuilding efforts have supported the construction industry, leading to rapid job growth and increased construction value. Several areas of Texas, such as the suburbs surrounding Dallas, are in the midst of a hot housing market with new construction racing against high demand. For general contractors in Texas, you don't want to spend more time than you need choosing the right type of business insurance.

Texas' insurance and bonding requirements vary from city to city, but there are some requirements that most cities have in common. San Antonio, for example, requires general contractors to register as home improvement contractors or residential building contractors depending on the extent of the work being performed. At the state level, Texas does require you to have general liability insurance, but it does not require employers to have workers’ compensation insurance. Texas does not license general contractors at the state level, but Texas state law does require you to get bonded for specific projects. Employers can still be sued over work injuries their employees experience, so workers' comp coverage is valuable, especially in a field like construction, even though it's not required.

Insureon makes shopping for insurance easy with industry-leading technology that gathers quotes from top U.S. carriers that fit your needs. Read more to find out which policies are most common for general contractors in Texas, and start an application to get your free quotes today.

Find the right insurance policy for general contractors

The most common policies for general contractors vary depending on a number of factors, including revenue, client contracts, and partnerships. The table below illustrates which policies might work best for your business type.

 

Business type General liability / BOP Bond Workers' comp
1099 or independent contractor X X  
Business owner with employees X X X
Solo business owner X X  

 

General liability insurance: General liability insurance is the foundation of a general contractor’s protection with coverage that extends to bodily injury, client property damage, advertising injury, and the cost of legal defense. Most commercial leases require you to have this coverage.

Professional liability insurance: Many clients require proof of professional liability insurance before entering contracts for professional services. This policy, also called errors and omissions insurance or contractor’s liability insurance, can help cover legal expenses if you’re sued for unsatisfactory work or a business discrepancy. Depending on the city you work in, you may be required to purchase this policy.

Business owner's policy (BOP): General contractors sometimes qualify for a business owner’s policy. This package helps your business save money by bundling commercial property insurance with general liability at an affordable rate.

Inland marine insurance: While property insurance can cover equipment that stays at your primary business location, inland marine insurance can cover items you use in the field, such as tools and any other equipment you use on the job. These things move from location to location, which subjects them to more opportunities for loss, damage, and theft. That’s why they require special coverage.

Commercial auto insurance: Commercial auto insurance can cover vehicles your business owns or uses for business purposes. If your vehicle is involved in an accident, this policy can cover your liability for the other person's bodily injuries and property damage. It can also pay to repair your car when it is damaged by theft, weather events, or vandalism.

License/permit bond: General contractors often need a license or permit bond before they can start construction projects. This bond offers project stakeholders a guarantee that you will perform your work and adhere to state and town regulations. If you fail to uphold that agreement, the insurance company reimburses the stakeholders for their losses. Unlike a typical insurance policy, you are obligated to pay the insurer back.

Builder’s risk insurance: Builder's risk insurance addresses unique property exposures that property insurance can’t cover. Primarily, it protects structures in progress from damage caused by fire, vandalization, and non-severe weather events. It can also cover building materials and equipment that must stay on site.

Texas workers' compensation insurance: Texas state law does not require workers’ compensation insurance. If an employee is injured on the job, workers’ comp can help pay for medical fees and lost wages. If you or any of your employees are injured on the job, it could end up being a huge financial blow, and you may still be liable for workers’ compensation damages even if you’re not insured. Texas runs a competitive state fund, meaning coverage can be purchased through the state as well as through private insurers.

Workers in the construction field are more prone to workplace injury than workers in many other fields. Given the strenuous nature of the work, even the safest jobsite doesn’t totally eliminate the risk of an accident. Across the United States, general contractors most commonly suffered workplace injuries resulting from overexertion and falls, slips, or trips in 2016, according to data from the Bureau of Labor Statistics shown in the chart below.

Most Common Workplace Injuries: General Contractors in the U.S.

Business insurance costs for general contractors in Texas

Despite the favorable costs of living and working in the Lone Star State, general contractors' insurance costs trend slightly higher than the national median. Workers’ compensation is generally the most costly nationwide for general contractors. This trend follows in Texas at around $440 per month. Although workers' comp is optional in Texas, the short-term savings of forgoing a policy could be wiped away immediately if you are injured on the job without protection. To save money on your insurance, ask your agent about bundling policies.

Median Insurance Costs for Texas General Contractors

Save time and money with Insureon

Insureon’s industry-leading technology helps general contractors in Texas save time and money shopping for insurance by comparing policies from dozens of top U.S. carriers. Simply apply online and review quotes for the policies that best fit your business needs. Our insurance specialists are licensed in Texas and can answer your questions as you consider coverage.

To make the application go even quicker, have this information ready:

  • Workforce details, such as the number and types of employees.
  • Current and projected revenue.
  • Business partnerships.
  • Insurance history and prior claims.
  • Commercial lease insurance requirements.

Apply for free general contractor insurance quotes today.