Small Business Insurance in Texas

Workers’ compensation can help cover medical bills, rehabilitation, and time away from work if an employee is injured on the job. Many Texas businesses choose this coverage to protect their employees, manage injury-related costs, and satisfy client or government contract requirements.

While workers’ comp is mandatory in most states, Texas is the exception. According to Texas Labor Code § 406.002, coverage is generally elective for most private employers. But opting out doesn’t necessarily mean opting out of responsibility — and it may open the door to significant risk.

In Texas, private employers that choose not to carry workers’ comp are known as non-subscribers. Non-subscribers generally must notify the Texas Division of Workers’ Compensation, post workplace notices, and file DWC Form-005 every year.  And if an injured employee sues, a non-subscriber may lose important legal defenses, including arguments that the employee was negligent or knew the risks.

Even if you choose to opt out, you may still be forced to carry coverage in certain situations. For example, if you take on a government building or construction contract, you must typically certify that all employees working on that public project are covered by workers’ comp.

General liability insurance helps protect your small business against third-party claims, such as property damage and bodily injury.

Texas doesn’t require general liability for most businesses — but the people you work with often will. Landlords may ask for proof of coverage before approving a lease. General contractors may require a Certificate of Insurance before a subcontractor can start work. And clients may want coverage written into the contract before they sign.

Local requirements matter too. A contractor pulling permits in Houston, Dallas, Fort Worth, Austin, San Antonio, or another Texas municipality may need to meet city or county licensing rules, which can include proof of liability insurance, a construction bond, or both.

A BOP typically bundles general liability, commercial property protection, and business interruption coverage to help pay for damages, repairs, and lost income so you can get back to work quickly after a claim. Many small businesses choose a BOP because it offers more protection than a stand-alone general liability policy without costing much more.

Texas doesn’t require a BOP, but it can be a practical fit for restaurants, retail stores, salons, and service businesses with property to protect. It can also be helpful after a covered event that forces you to temporarily close, such as a fire, a burst pipe, or covered storm damage. 

One caveat that matters in Texas: standard commercial property and BOP policies don’t cover flood damage from rising water. Along the Gulf Coast, around Houston, and in other low-lying areas, separate flood insurance may be worth considering.

When clients pay your business for professional expertise, a single oversight can lead to a major dispute. Professional liability insurance, also known as errors and omissions (E&O) coverage, helps protect you from claims of negligence, missed deadlines, errors, or omissions in your deliverables. It can also help cover legal defense costs, settlements, and judgments if a client files a formal legal claim against you.

Texas doesn’t require professional liability for most businesses, but if clients hire you for your professional services, it’s worth strong consideration. One unhappy client claiming your advice cost them money — or that your work contained a costly error — can trigger a lawsuit, even if the claim is baseless. 

For consultants, IT firms, accountants, designers, and other service providers, E&O is often written right into client contracts. And depending on your field, Texas state licensing boards may even require it to keep your license active.

If your business owns or operates vehicles, your personal auto policy typically won’t cover accidents that happen during business use. A separate Texas commercial auto policy can cover business driving, such as trips to job sites, deliveries, client visits, or hauling tools and equipment.

Texas requires drivers to be able to pay for accidents they cause, and the state minimum liability limits are commonly known as 30/60/25 coverage: $30,000 for bodily injury per person, $60,000 total bodily injury coverage per accident, and $25,000 for property damage. Some operations need more — motor carriers, heavier vehicles, passenger transport, hazmat haulers, and businesses driving across state lines can face higher state or federal requirements. 

While Simply Business doesn’t currently offer commercial auto insurance in Texas, our licensed insurance agents can help you find trusted providers that do.