When you’re working as a contractor, accidents can happen even at a well-organized job site. While you and your employees are toiling under the Texas sun, it’s easy to spill water and cause a slip-and-fall accident. Or when you remove your gear to cool off, a client or passerby could trip on it and get injured.

With all the things you have to worry about — including adhering to deadlines and minimizing costs — the last thing you want is a lawsuit. This is why it’s critical for you to have insurance that’s as detailed as your blueprint. Not sure where to start? Here’s what you need to know about Contractor Insurance in Texas.

What are the insurance requirements for contractors in Texas?

Like other states, Texas has specific rules for general contractors. Here are the types of contractor insurance you must have:

  • General liability insurance: This policy covers claims related to non-employee, third-party bodily injury and property damage. For example, if you swing a hammer too hard and break an expensive piece of furniture, your general liability insurance can help pay to repair it.
  • Workers’ compensation insurance: Worker’s compensation covers the medical expenses incurred by a worker’s occupational injury or death. Though Texas doesn’t require most private employers to carry workers’ compensation, they do require companies that work with government agencies to cover all workers on the project. Some contractors ask their subcontractors and independent contractors to carry the policy, so it’s good to have it just in case.1
  • Builder’s risk insurance: This policy covers accidental loss or damage to buildings or structures under construction including the materials which will eventually become part of the finished project. Texas requires builders risk coverage to be in force from the time ground is broken until completion or occupancy.2

What are other types of insurance contractors need in Texas?

Texans are known for their independence, but having an insurance policy can protect your earnings. It’s important to buy insurance that protects your small business from a range of claims that could cause you financial harm. Besides general liability insurance, workers’ comp, and builder’s risk insurance, here are typical policies that Texas contractors buy to protect their work:

  • Professional liability insurance: Provides financial protection for claims stemming from mistakes you’ve made on the job that have cost your clients money. Texas requires developers to carry professional liability insurance for up to 10 years, and the state also has specific aggregate and occurrence limit requirements.3
  • Business Equipment Protection: With this insurance coverage, you can protect the tools and equipment that you take to and from your work sites. It will pay for the costs associated with accidental damage, loss, theft of the tools you own or lease.
  • Commercial property insurance: This type of insurance covers the building where you operate from and the business contents within it. You’ll need this if you lease your office space, because landlords typically require renters to get insurance to cover liability arising from their operations.

What are the COI requirements in Texas?

The state of Texas requires all contractors to submit a Certificate of Insurance (COI) once they pass their licensing exam. Contractors are also required to have different per-occurrence limits and aggregate limits for insurance based on their license class, according to the Texas Department of Licensing & Regulation.4

Your COI provides proof for your vendors, or in this case Texas regulators, that you’ve obtained liability insurance. This document, which is usually no longer than a page, shows the coverage and policy limits you have for your business.

Furthermore, many clients may ask you for a COI before they enter into a contract with you. You may need to add Additional Insureds, or other individuals or entities to your liability coverage. Thimble emails your COI immediately once you purchase your insurance policy, and you can add as many Additional Insureds as you need at no additional cost.

How much does contractor insurance cost in Texas?

As a contractor, you want to keep your costs low, but insurance is one expense you can’t afford to overlook. With Thimble, Contractor Insurance in Texas costs $105 per month on average. Need an exact number? Click “Get a Quote” here or on the Thimble site, answer a few quick questions, and get your quote in minutes.

Contractor licensing requirements in Texas

In addition to having adequate insurance coverage to protect your business, you also need to have the proper licensing to run your business. Here are the contractor licensing requirements in Texas:

  • Proof of experience: As a contractor, you’ll need to provide documentation illustrating that you’ve had adequate on-the-job training. Air conditioning and refrigeration contractors need to have proof of experience working under the supervision of a licensed air conditioning or refrigeration contractor. Or, they can have technician certification and practical supervised work experience under a licensed air conditioning and refrigeration contractor.5
  • Proof of insurance: Contractors typically have to provide proof of a valid, active insurance policy. For example, Texas requires air conditioning and refrigeration contractors to have a commercial general liability insurance policy for the duration that their license is active.6
  • Pass your licensing exam: Texas contractors will need to pass the appropriate licensing exam after providing the application and proof of qualifications to the Department of Licensing and Regulation.
  • Registration with local government agencies: Texas contractors need to register with the appropriate government agencies prior to starting their client work. For example, contractors in Fort Worth must complete a registration form and pay a fee with that city.

You’re not alone in the Lone Star State

With all the risks you’re facing as a contractor, having the right insurance coverage is the best way to protect your business from all the possible things that could go awry. Before you pick your policy, here’s what you need to keep in mind:

  • Contractors need to carry various basic insurance policies, including general liability insurance & workers’ compensation. If they own (or lease space in) a building, then commercial property insurance is needed, and depending upon their contract, builder’s risk insurance or Business Equipment Protection may be required.
  • Research the coverage limits you need based on the services you provide as a contractor.
  • Provide proof of insurance and experience to register your business with local government agencies and obtain the proper licensing in Texas.

Get Contractor Insurance before you grab your hard hat. To keep claims from bulldozing your business, click “get a quote” or download the Thimble app, tell us some information about your business, and click to purchase. Once you buy your policy, we’ll send you a COI directly to your inbox. Armed with insurance, y’all have a foundation to build a strong business.

Sources:

  1. Texas Department of Insurance. Workers’ compensation insurance guide. 
  2. Insurance Coverage Requirements. Texas Department of Transportation. 
  3. Insurance Coverage Requirements. Texas Department of Transportation. 
  4. Texas Department of Licensing & Regulation. Apply for a Contractor License. 
  5. Texas Department of Licensing & Regulation. Apply for a Contractor License. 
  6. Texas Department of Licensing & Regulation. Apply for a Contractor License.