Small Business Insurance Buying Guide For Texas
Escrito por: Janeth López, CEO y Fundadora de Paga-Menos Insurance Group
Revisado por: Ingrid López, Agente de Seguros con Licencia Estatal
Última revisión: 7 de octubre de 2026
Business owners often shop for insurance for the first time because someone asks for proof of it: a general contractor, a property manager, or a client with a contract ready to sign. This guide covers what Texas law requires, what clients will ask for, which policies fit common trades, and what to have ready so you buy the right coverage the first time.
Paga Menos Insurance is an independent insurance agency in Houston. Our owner, Janeth López, has worked in personal and commercial insurance for 15 years, and our team helps business owners across Texas in English and Spanish.
What Texas law requires, and what it doesn’t
Texas has no general rule that every business must carry liability insurance. The state rules that apply to most small businesses are narrower.
Vehicles you use for work
Every vehicle driven on Texas roads needs liability coverage of at least 30/60/25: $30,000 for each injured person, up to $60,000 per accident, and $25,000 for property damage. According to the Texas Department of Insurance (TDI), most personal auto policies don’t cover driving for business, so tell your agent how each vehicle is used and who drives it. Pickups, vans and company-owned vehicles usually need a commercial auto policy.
Workers’ compensation
Most private employers in Texas can choose whether to carry workers’ compensation. If you choose not to, you become what the state calls a nonsubscriber, and 3 rules apply:
- You lose 3 defenses in court. If an injured employee sues you, you can’t argue that the employee was careless, that the employee accepted the risk, or that a coworker caused the injury. You can still defend yourself if the employee was intoxicated or caused the injury on purpose, and the employee still has to prove you were negligent (Texas Labor Code 406.033).
- You file a notice every year. Nonsubscribers file a notice of no coverage (DWC Form-005) online with TDI’s Division of Workers’ Compensation between February 1 and April 30 each year, and within 30 days of hiring their first employee (TDI nonsubscriber reporting).
- You tell your employees. Give each new hire written notice that you don’t carry coverage, and post the state’s notice where your employees can see it.
Even when the law doesn’t require workers’ comp, your clients may. General contractors and property managers often ask for it before you start work.
Public construction projects
On a building or construction contract with the state, a county, a city or another public entity, the contractor must certify in writing that it carries workers’ comp for each of its employees on the project, and each subcontractor gives its certificate to the general contractor (Texas Labor Code 406.096).
Licensed trades
Some state licenses require proof of general liability insurance. The Texas Department of Licensing and Regulation (TDLR) and the Texas State Board of Plumbing Examiners set these minimums:
| License | Issued by | Minimum general liability |
|---|---|---|
| Electrical contractor | TDLR | $300,000 per occurrence, $600,000 aggregate, $300,000 products and completed operations |
| Air conditioning and refrigeration contractor, Class A | TDLR | $300,000 per occurrence, $600,000 aggregate, $300,000 products and completed operations |
| Air conditioning and refrigeration contractor, Class B | TDLR | $100,000 per occurrence, $200,000 aggregate, $100,000 products and completed operations |
| Responsible Master Plumber | Texas State Board of Plumbing Examiners | $300,000 for all claims in a 1-year period |
Texas doesn’t issue a statewide license or set a state insurance minimum for general contractors, remodelers, painters, drywall or insulation contractors, or cleaning companies doing general work. Specialty work, such as mold remediation, has its own state license. For general work, the requirement usually comes from the contract, and city rules can add requirements, so check with the city where you work.
Food trucks
Since July 1, 2026, the Texas Department of State Health Services (DSHS) handles food truck permits in Houston instead of the city, and the city still inspects trucks under state authority. The Houston Health Department lists a vehicle insurance card among the documents to provide, so insure the truck before you apply, and confirm the current list with DSHS.
What your clients and contracts will ask for
For most contractors and cleaning companies, the insurance requirement comes from the client. General contractors, property managers and apartment owners usually ask for proof of insurance before your first day on the job. Read the insurance section of the contract before you buy, and look for:
- The policies they require, often general liability, workers’ comp and commercial auto
- The minimum limit for each policy
- Whether they must be added to your policy as an additional insured
- Whether they want a waiver of subrogation, which stops your insurer from trying to recover a claim payment from them
- How soon they need your certificate of insurance
In Texas, a certificate of insurance only shows that a policy exists. It can’t change or add to your coverage, and it must be on a form approved by TDI, such as the standard ACORD 25. A client can’t require a different form or wording your policy doesn’t contain (TDI certificates of insurance FAQ). If a contract asks for something your certificate can’t show, ask your agent whether your policy needs an endorsement.
One cleaning company came to us with a chance to clean apartment complexes for a large company. They didn’t know how to get started. We got them insured the same day, and they now clean properties in Houston, Austin and Dallas.
Common policies for Texas small businesses
General liability
General liability pays for injuries to people who don’t work for you, damage to other people’s property, and personal and advertising injury claims your business is legally responsible for. In our experience, it’s the policy contracts ask for most. If you’re a contractor, ask about products and completed operations coverage, which applies to claims that come up after you finish a job.
Workers’ compensation
Pays medical bills and part of the lost wages for employees hurt on the job. It’s optional for most Texas private employers, and contracts often require it.
Commercial auto
Covers the pickups, vans and other vehicles your business owns or uses for work. Contracts can require higher limits than the 30/60/25 state minimum.
Business owner’s policy (BOP)
A BOP combines property insurance, liability insurance and business income coverage in 1 policy. BOPs are made for small and midsize businesses, and not every business qualifies. A BOP doesn’t include commercial auto, workers’ comp or professional liability (Insurance Information Institute).
Commercial property
Pays to repair or replace your building, equipment and inventory after a covered loss such as a fire or storm. TDI’s commercial property insurance guide explains the options, including flood coverage, which you buy separately.
Professional liability
Professional liability, also called errors and omissions, covers claims that your advice or professional work was negligent and cost a client money. Most trades rely on general liability for injury and property damage claims and add professional liability only if they sell advice or design work.
Surety bonds
A surety bond is a 3-party agreement in which a surety company guarantees the project owner that you’ll meet your contract. A performance bond covers finishing the work, and a payment bond covers paying your subcontractors and suppliers. The bond protects them, so if the surety pays a claim, you pay it back.
Janitorial bonds
Cleaning companies often add a janitorial bond, which can pay your clients if one of your employees steals from them. Ask how claims work before you buy, including whether you must repay the bond company for a claim it pays. Our janitorial insurance guide has more on coverage for cleaning companies.
Where to start, by type of business
| Business | Start with | Also ask about |
|---|---|---|
| Construction and remodeling | General liability, commercial auto | Workers’ comp, which general contractors often require; surety bonds for public or large projects |
| Painting, drywall (sheetrock) and insulation | General liability, commercial auto | Workers’ comp, which general contractors often require |
| Cleaning services | General liability | Workers’ comp; a janitorial bond |
| Taco trucks and food trucks | Commercial auto, general liability | Coverage for your kitchen equipment |
What affects your price
Every quote depends on your business. Insurers look at:
- The work you do, since each type of work has its own risk and rate
- Your estimated payroll and sales, which general liability and workers’ comp premiums are often based on
- Your years in business and your claims history
- The limits and deductible you choose
- Your vehicles and the driving record of each driver
- Whether your subcontractors carry their own insurance
That last point surprises contractors at audit time. Policies priced on payroll or sales are usually audited after the policy period ends. If you paid subcontractors who couldn’t show their own certificate of insurance, the insurer can add those payments to your premium. Get a current certificate from every subcontractor before they start.
How to buy small business insurance in Texas, step by step
- List everything your business does. Include every service, even occasional side jobs. A policy may not cover work it doesn’t list.
- Collect your insurance requirements. Check your contracts, your lease, any state license you hold, and any loan agreement.
- Gather your business details. Have your legal business name and structure (sole proprietor, LLC or corporation), years in business, estimated payroll and sales for the next 12 months, number of employees, and any past claims.
- Add your vehicle details. Bring the vehicle identification number (VIN) for each vehicle, the name of each driver, and how each vehicle is used.
- Choose limits and a deductible. Match the limits your contracts require, then pick a deductible you can pay out of pocket.
- Compare quotes on the same terms. Use the same limits for each quote, and read what each policy excludes.
- Check the agent and the insurer. Confirm an agent’s license with TDI’s agent lookup, and look up an insurance company’s complaint record through TDI’s company profiles page.
- Get your proof of insurance. Ask for your certificate of insurance and send it to your client before your first day on the job.
- Review your coverage every year. Update it when you add a service, a vehicle or an employee.
Mistakes we see Texas business owners make
Staying on someone else’s insurance
One construction client was tired of paying the company he works for large amounts of money for insurance. He thought getting his own policy would be too hard because he doesn’t speak fluent English. He now has his own policy.
Buying on price alone
The cheapest quote can leave out the work you do most. Before you compare prices, check that each quote lists every service you offer.
Counting on an LLC instead of insurance
An LLC can protect your personal property from lawsuits against your company, but that protection has limits (U.S. Small Business Administration). Your company can still be sued, and an LLC doesn’t protect you from claims over harm you cause yourself. Insurance pays covered claims and the cost of defending them.
Signing before you check the insurance section
Read the insurance requirements before you sign the contract, so you have time to get the right limits and your certificate before work starts.
Get a quote from Paga Menos Insurance
Our team works with business owners in English and Spanish: Janeth López, owner and agent; Ingrid López, manager and agent; Lizabe Moreno, agent; and Alondra, customer service.
- Call: (832) 804-9286
- Visit: 5901 Bellaire Blvd, Suite C, Houston, TX 77081. Monday to Friday, 9:00 am to 6:00 pm; Saturday, 10:00 am to 4:00 pm.
- Online: request a quote
- Certificates: most business clients get their certificate of insurance the same day.
- Payments: monthly installments, autopay or ACH bank transfer.
We insure businesses across Texas, not only in Houston. Paga Menos Insurance, Texas license #1902026.
FAQs
Do I need business insurance if I’m a sole proprietor?
Texas doesn’t require it for most businesses, but your clients, your landlord and some state licenses can. Your personal auto and home policies may not cover claims that come from your work.
Is workers’ comp required in Texas?
Not for most private employers. It’s required on public building and construction projects, and contracts often require it. If you don’t carry it, you generally must file a notice with TDI every year and tell your employees in writing.
How fast can I get a certificate of insurance?
For business insurance, most of our clients get it the same day.
Can I buy business insurance in Spanish?
Yes. Our team works with you in Spanish or English, from your quote to your certificate of insurance.
Can I get vehicle insurance without a U.S. driver’s license?
Yes. In Texas you can insure a vehicle without a U.S. driver’s license. Tell us who will drive it, and we’ll show you the options.
Sources: Texas Labor Code Chapter 406, TDI workers’ compensation for employers, TDI nonsubscriber reporting, TDI auto insurance guide, TDI commercial property insurance guide, TDI certificates of insurance FAQ, TDLR electrical contractor license, TDLR air conditioning and refrigeration contractor license, Texas State Board of Plumbing Examiners, Houston Health Department mobile food units, Insurance Information Institute on BOPs, Insurance Information Institute on liability insurance, U.S. Small Business Administration and Surety and Fidelity Association of America.
Related articles
- Workers Compensation: Essentials for Texas Businesses
- Understanding Commercial Property Insurance in Texas
- A Beginner’s Guide to Surety Bonds Coverage
- How to Choose the Best Contractor Business Insurance
Janeth López can insure a Texas driver even without a U.S. driver’s license, the kind of policy many families assume isn’t available to them. As an agent at Houston-based Paga Menos Insurance, she covers the whole state across personal and commercial lines, from home, auto, and life coverage to business policies for taquerías, drywall crews, and truckers. She handles all of it in Spanish and builds payment plans around what a client can actually afford.