General Contractor Insurance in Texas

While there's no statewide requirement for a general liability insurance policy for contractors, that doesn't mean you don't need it. Many cities and other municipalities in Texas require general contractors to register, apply for a permit, and carry insurance—including general liability insurance.

General liability insurance is the most common type of liability insurance. It protects your construction business from expenses associated with third-party mishaps, such as customer injuries and accidental property damage.

Most commercial leases also require businesses to carry this coverage. Adding commercial umbrella insurance can boost your coverage on general liability insurance and other policies.

Contractor general liability insurance can also help protect against advertising injuries, such as libel, slander, and copyright infringement. So, for example, if an employee at your business posts false negative comments about a competitor on social media, your policy would help pay for legal costs if the other business sues.

Unlike in other states, general contractors who work for private employers in Texas are not required to carry workers’ compensation insurance. However, it is recommended for every employer. Even sole proprietors can benefit from coverage, as health insurance won't pay for medical costs that are related to your job.

Additionally, contractors who work for public employers or perform construction work for government entities in Texas are required to carry workers' compensation insurance. And as mentioned above, you may need it for a professional certification from the NAHB or other organization.

Those who work in hazardous occupations, such as roofers, tree service technicians, and HVAC contractors, should carry workers' comp even if they do not have any employees. Because medical bills can escalate, having this coverage could mean the difference between bouncing back from an injury and bankruptcy.

A commercial auto policy is required in Texas for all vehicles owned by your general contracting company. It covers property damage and medical bills resulting from an accident, along with vehicle theft, weather damage, and vandalism.

Auto insurance requirements for Texas businesses include a minimum of:

• $30,000 in bodily injury liability or death liability per person
• $60,000 in bodily injury liability or death liability to more than one person
• $25,000 in property damage per accident

You may want to consider additional coverage, depending on the kind of work you do and the vehicles you own.

If you drive your own vehicle for work purposes, or rent or lease a vehicle for business use, you'll need a separate policy called hired and non-owned auto insurance (HNOA). Your personal auto insurance policy won't cover incidents that happen while you're driving for work, with the exception of a commute.

As with general liability insurance, there is no statewide requirement for a surety bond, but many cities and other municipalities require general contractors to obtain one.

Different types of bonds act as financial guarantees during a construction project. For example, you might need a bid bond to bid on a project, or a performance bond to sign a contract with a client.

A surety bond guarantees reimbursement if a general contractor fails to fulfill the terms of a contract. Unlike an insurance claim, this amount must be paid back to the company that issued the bond.