Texas contractor insurance quote: license requirements, liability and workers' comp

If you are a Texas contractor who needs an insurance quote, start with two questions: does your trade's state license require proof of insurance, and do you need workers' compensation for the jobs you bid? Texas licenses certain trades at the state level, including electrical and air conditioning contractors through the Texas Department of Licensing and Regulation (TDLR) and plumbers through the Texas State Board of Plumbing Examiners (TSBPE), and each sets liability insurance minimums. Burch Insurance Group quotes general liability, workers' compensation and related coverage for contractors in Houston, Dallas-Fort Worth, Austin, San Antonio and across the state.

Which Texas contractor licenses require insurance?

These state-licensed trades must show commercial general liability insurance:

• Electrical contractors (TDLR): at least $300,000 per occurrence and $600,000 aggregate for bodily injury and property damage, plus $300,000 aggregate for products and completed operations. You must also employ a licensed Master Electrician, who can be the owner.
• Air conditioning and refrigeration contractors (TDLR): Class A licenses need at least $300,000 per occurrence, $600,000 aggregate and $300,000 products and completed operations. Class B licenses need at least $100,000, $200,000 and $100,000. TDLR says you must keep the insurance in force at all times while the license is active.
• Plumbing (TSBPE): a Responsible Master Plumber must show at least $300,000 of commercial general liability coverage, with a certificate of insurance submitted with the application.

These are minimums for keeping the license. They are often lower than what general contractors and property owners ask for in a contract.

What if I do general building or remodeling work?

If your work is general building, remodeling or roofing rather than one of the licensed trades above, check with the city where you work. The state's Business Permit Office reminds businesses that permitting requirements also have to be met at the local level, and many Texas cities have their own registration and permit rules. Your insurance needs are then driven mostly by your contracts and your clients.

Do Texas contractors have to carry workers' comp?

Texas is unusual. The Texas Department of Insurance says Texas does not require most private employers to carry workers' compensation. Employers that do not carry it are often called nonsubscribers. Choosing not to carry it has real consequences:

• An injured employee can sue you over a workplace injury, and you lose key defenses, such as arguing the employee's own negligence caused the injury.
• You must file an annual notice of no coverage with the Division of Workers' Compensation (DWC Form-005) between February 1 and April 30, within 30 days of hiring your first employee, and within 10 days of ending a workers' comp policy.
• You must post a notice of no coverage in the workplace and tell new employees in writing that they are not covered.

There is an important exception for contractors. Private employers who contract with government entities must provide workers' compensation coverage. On a public building or construction project, TDI's required notice says coverage applies to each person working on the site, including those delivering or hauling materials, regardless of who employs them.

TDLR's electrical contractor license application also asks for proof of workers' compensation, a certificate of authority to self-insure, or a statement that you are opting out, in which case you file the notice of no coverage with TDI.

What do general contractors and clients usually ask for?

Even when the state does not require workers' comp, many Texas general contractors and commercial owners require it from subcontractors. Expect requests for:

• A certificate of insurance before you start work.
• Additional insured status for the general contractor and owner, often on an ongoing and completed operations basis.
• Waiver of subrogation and primary and noncontributory wording.
• Specific limits for general liability, commercial auto and umbrella coverage.

Send us the insurance section of the contract before you sign it, so we can tell you whether your policy can meet it.

Fictional example: an HVAC company bidding a school job

Take a fictional six-employee HVAC company in San Antonio that has been a nonsubscriber. It holds a Class A license with the TDLR minimum limits. It wins a subcontract on a school district project. Because the project is for a governmental entity, the company needs workers' compensation for the job, and the general contractor's contract asks for $1,000,000 per occurrence liability and additional insured status. We quote a workers' comp policy and higher liability limits before the contract deadline. This is an illustration, not a promise of a particular result.

Questions Texas contractors ask us

Is the TDLR insurance minimum enough? It keeps the license active. Many contracts ask for higher limits, so check before you bid.

Can I stay a nonsubscriber? For most private work, yes, if you file the required notices. Public projects require coverage.

Do my subcontractors need their own insurance? Ask for their certificates. Uninsured subcontractors can increase your own premium and claims exposure.

Do I need an agency with a Texas office? No. Burch Insurance Group is licensed in Texas and works with Texas contractors by phone and online.

What BIG needs to quote

Send your trade and license numbers, the cities and types of jobs you do, annual revenue and payroll, number of employees, subcontractor costs, any contract insurance requirements and five years of loss runs. Our guides to builders risk insurance and building renovation insurance cover the property side of a project.

Request a contractor insurance quote, or call 612-712-6407.