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General Liability Insurance for Texas Contractors (2026)

Writer: Jack Dear
Jack Dear
1 day ago
14 min read

I'm an insurance agent. Here are straight answers to the questions contractors ask most about general liability, including the one I think matters most: what happens if you go without it?

General liability insurance pays when your work hurts someone else or damages someone else's property. You'll hear it called "GL" or "CGL" (commercial general liability). It covers other people, not you or your crew.

Quick Answers

  • What does GL cover? Injuries and property damage your work causes others, plus your legal defense.

  • What doesn't it cover? Your employees, your trucks, your tools, redoing your own work, and design mistakes.

  • Is it required in Texas? No. Texas has no general contractor license and no state GL rule for contractors. Only certain state-licensed trades and service businesses must carry it, like electricians, HVAC, plumbers, elevator, mold, pest control, fire protection, security and locksmith, and propane companies. Most GCs and commercial jobs require it anyway.

  • What if I don't have it? You still owe for damage you cause. A claim can wipe out your bank account and follow you for years.

  • How much do I need? Plan on $1 million per occurrence and $2 million aggregate.

  • GL vs. professional liability? GL covers physical harm. Professional liability covers money lost from your advice or design.

In This Guide

Being Insured Is a Selling Point

GL is a cost of doing business, just like fuel and tools. It's also proof you run a real business.

When you carry it, you're telling your customer: "If something goes wrong on your job, I'll make it right. You won't be stuck with the bill."

  • Lead with it. Put "Fully Insured" on your truck, website, bids, and business cards. Only say "licensed" if you hold a state license.

  • Hand over your COI before they ask. It shows you have nothing to hide.

  • Explain the price gap. The guy with no insurance can bid lower because he isn't paying for coverage. If he causes damage, the customer pays for it.

  • Build it into your bids. Insurance is overhead. Price it in, and don't apologize for it.

Customers remember who protected them. That's how you get the next job and the referral.

What Does General Liability Insurance Cover?

Short answer: General liability protects your business when your work causes harm to someone else. It can help pay for:

  • Injuries to other people caused by your work, like a customer or passerby.

  • Damage to other people's property, like a customer's home, car, or belongings.

  • Problems that show up after the job is done, even months or years later.

  • Your legal defense if someone sues you over a covered claim.

Someone Else Gets Hurt Because of Your Work

You're on a ladder. A drill slips and hits the homeowner on the shoulder. GL can help pay their medical bills and your legal defense if they sue.

You Accidentally Damage Someone's Property

You cut into a wall and slice a water line you didn't see. The floor floods. GL can help pay to fix the customer's floors and drywall.

Claims That Show Up After the Job Is Done

This is called products and completed operations. The Texas Department of Insurance (TDI) says it pays for injury or damage caused by your products or completed work, away from your own shop.

Example: You install a water heater in March. In September, a fitting fails and floods the house. The job is long done, but the claim comes back to you. In Texas, many construction claims can be filed up to 10 years after the work is substantially completed.

Real Examples by Trade

  • Electricians: A loose connection in a panel you replaced starts a fire six months later.

  • Plumbers: A slab leak you repaired gives way and soaks the hardwood floors.

  • HVAC techs: Your condensate line backs up and stains the ceiling below the attic unit.

  • Roofers: A shingle bundle slides off the roof and dents a customer's truck.

What Doesn't General Liability Cover?

Short answer: GL covers other people. It doesn't cover your crew, your trucks, your tools, or the cost to redo your own work. Here are the gaps I look for:

  • Your own employees getting hurt. That's workers' compensation. In Texas, most private employers can choose whether to carry it. But if you don't, an injured worker can sue you, and you lose key legal defenses. Government jobs require it, and many GCs do too.

  • Your trucks and vans. Wrecks in your work vehicle need commercial auto insurance.

  • Your tools and equipment. If your gear is stolen from the truck or job site, you need inland marine (also called tools and equipment coverage).

  • Fixing your own faulty work. TDI notes a policy may cover damage to the homeowner's car but not the faulty roof itself.

  • Mistakes in advice or design. That's professional liability. More on that below.

  • Pollution. Most GL policies exclude pollution. That can matter for refrigerant, mold, or chemicals.

  • Some contract promises. If you agree to cover someone else's mistakes, GL may not pay.

  • Work by uninsured subs (on many policies). Many carriers require you to collect a COI from every sub, and your application will ask about it. Depending on your policy, an uninsured sub can mean no coverage for their work or a bigger bill at audit.

Is General Liability Required by Law in Texas?

Short answer: No. Texas doesn't license general contractors, remodelers, roofers, or handymen, and there's no state law requiring them to carry GL. But almost every real job will ask for it.

The Texas Governor's Office says plainly that general contractors are not required to obtain a license to practice in Texas. With no state license, there's no state rule telling you to carry GL. But the people you work for often require it. A GC will usually want your Certificate of Insurance before you start work. Public work is the same way. TxDOT wants proof of commercial general liability before it signs a contract, and it will issue a cease-work notice if your insurance lapses. Project owners like the City of Dallas spell out the insurance contractors must carry, and cities may want proof before you pull permits.

The Exception: Licensed Trades and Service Businesses

A number of trades and service businesses are licensed by the state and must carry GL to keep that license. If you hold one, you already know. Here are the state minimums for the most common ones:

License

Minimum GL Required

TDLR electrical contractor

$300K per occurrence / $600K aggregate / $300K completed operations

TDLR HVAC Class A

$300K / $600K / $300K (Class B: $100K / $200K / $100K)

TSBPE Responsible Master Plumber

$300K for all claims in a one-year period, on the TSBPE form, not an ACORD form

TDLR elevator contractor

$1M per occurrence for bodily injury or death / $500K per occurrence for property damage

TDLR mold assessment or remediation company

$1M per occurrence

Texas Department of Agriculture structural pest control business

$500K per occurrence / $1M aggregate, with the "care, custody, and control" exclusion removed

State Fire Marshal fire sprinkler firm

$100K per occurrence / $300K aggregate, including products and completed operations. Fire alarm and fire extinguisher firms must also carry GL to register.

DPS security, alarm, locksmith, or access-control company

$100K per occurrence for bodily injury and property damage / $50K personal injury / $200K aggregate

Railroad Commission LP-gas (propane) company

Most installer and dealer categories: $300K per occurrence / $300K aggregate, plus $300K completed operations. Some categories need only $25K / $50K.

Other licenses may have their own rules. Check with your licensing agency, and send me your license type so I can match your policy to it.

What Can Happen If You Don't Have General Liability?

Short answer: You're still responsible for the damage your work causes. Without GL, you pay for it yourself, and you'll likely lose work along the way.

If you sell a product or do work for someone, you can be held liable for the harm it causes. Insured or not. Insurance doesn't create your responsibility. It decides who pays: you, or an insurance company.

You Pay the Claim Out of Your Own Pocket

Say you're a handyman with no policy. You replace a bathroom supply line. It fails a month later and floods the house. The homeowner can still come after you.

Your Personal Money Is on the Line

Most small trades start as sole proprietors. That means you and the business are the same person in the eyes of the law. The SBA says a sole proprietor has unlimited personal liability. If you lose a lawsuit, creditors can reach your personal assets.

Even a claim you win costs money. Liability insurance can help pay for legal defense, medical bills, settlements, and damages. Without it, you pay the lawyer yourself. An LLC can help, but it isn't a substitute for insurance. Ask your attorney.

You Lose Jobs Before They Start

"No COI, no start" is how most GCs and commercial jobs work. No policy means no certificate, and no certificate means someone else gets the job.

There's a money reason behind that. Many GC policies have a subcontractor warranty, an add-on that sets rules for hiring subs. If the GC hires an uninsured sub, its policy may refuse to defend or pay the claim. GCs can also pay extra premium for uninsured subs. I break this down in Hiring Uninsured Subs in Texas: How It Can Void Your GL Coverage.

You Can't Pull Permits

Cities check. In Dallas, the permit system won't issue a permit if an electrical contractor's insurance has expired. For plumbers, Texas law requires cities to verify the RMP has a certificate of insurance on file with TSBPE before issuing a permit.

Licensed Businesses Face Fines and Suspension

If your license requires GL and you let it lapse, the state can act:

What One Bad Claim Can Do to You

My take: No law makes most of you buy GL. But here's what one bad claim can do to an uninsured contractor in Texas:

Going without GL also shuts doors long before a claim ever happens.

How Much General Liability Coverage Do I Need?

Short answer: Plan on $1 million per occurrence and $2 million aggregate. That's what most GCs and commercial jobs ask for, even when your license minimum is lower.

What $1M / $2M Means

  • $1,000,000 per occurrence: The most the policy pays for one accident or event.

  • $2,000,000 aggregate: The most it pays for all claims added together in one policy year.

One City of Dallas contractor form asks for $1 million per occurrence, $2 million general aggregate, and $2 million completed operations aggregate. Carry only your license minimum and you may keep your license but lose the bid.

Why Completed Operations Matters for Trades

Your work stays behind after you drive away, and it can fail years later. Many contracts ask for a separate completed operations limit, often $2 million.

I'll also check whether your policy is "occurrence" or "claims-made." An occurrence policy covers damage that happened while the policy was active, no matter when the claim is filed. A claims-made policy only covers claims reported while the policy is active. For trades, occurrence is usually safer.

Certificates and Additional Insureds

A Certificate of Insurance (COI) is a one-page summary from your agent that proves you have coverage. In Texas, a COI can't change or add to your coverage. It's just a summary.

When you hire a sub, have the sub's insurance agent send the COI straight to you. Don't take a copy from the sub. A certificate can be old, changed, or fake. A missing or old date can be a sign of a forged certificate. One coming straight from the agent shows the policy is active today. Ask for a new one every time the policy renews.

An additional insured is another party, like the GC or property owner, who gets added to your policy for claims tied to your work. Writing "additional insured" on a certificate does nothing by itself. The ACORD form says the policy must have additional insured provisions or be endorsed. An endorsement is an add-on that changes your policy. Send me the contract before you sign, and I'll check that your policy matches it.

What's the Difference Between General Liability and Professional Liability?

Short answer: GL covers physical harm, like injuries and property damage. Professional liability covers money a customer loses because of your advice, design, or planning.

Professional liability is also called errors and omissions. Do you need both? TDI's answer is "You might."

  • GL claim: An AC unit you installed leaks and ruins the ceiling. That's physical damage.

  • Professional liability claim: You sized and designed a commercial HVAC system. It never cools the building right. Nothing is broken, but the owner has to pay to redo it.

If you do design-build work, draw plans, or give paid recommendations, ask your agent about professional liability.

One More Thing: Admitted vs. Surplus Lines Carriers

When I shop your policy, quotes may come from two kinds of insurance companies.

  • Admitted carriers are licensed by TDI. If one goes broke, a state guaranty fund pays up to $300,000 or the policy limit, whichever is less. They're common for everyday trade work. But every admitted carrier I'm familiar with caps subcontracted work at 25% of gross receipts. Go over that, and you'll likely need a surplus lines carrier.

  • Surplus lines carriers step in when regular companies won't, often for general contractors, remodelers, roofing, new businesses, or past claims. TDI notes there's no guaranty fund backup and fewer cancellation protections.

TDLR electrical and TSBPE plumbing accept eligible surplus lines carriers. The HVAC rule doesn't say so directly, so I'll confirm TDLR will accept one before you buy. Surplus lines isn't bad. I'll always tell you which kind you're getting.

Why GCs and Remodelers Often Go Surplus Lines

Most admitted carriers I'm familiar with shy away from general contractors and remodelers. The work is too open-ended. A few admitted programs will take a small remodeling GC, but they cap your size and your sub costs. Most of the GCs I write end up with a surplus lines carrier.

Admitted carriers rate by trade class, a category for one kind of work. Many won't rate "bathroom remodeling" as one job. They split it into plumbing, electrical, flooring, tile, and cabinets, and each class gets a dollar amount for how much of that work you do in a year.

So when we apply, I'll ask you to break your receipts down by trade. Be accurate. Those dollars drive your price, and they show the carrier what it's agreeing to cover.

Be Ready for the Supplemental Application

Many carriers won't quote off the standard application alone. They also want a supplemental application, an extra set of questions just for contractors. Some run five pages or more.

Here's what they usually ask:

  • Your business: Years in business, years of experience, and any licenses you hold.

  • Your work mix: How much is GC work vs. sub work, residential vs. commercial, and new vs. remodel.

  • Your numbers: Payroll, gross receipts, and sub costs, often for the past five years. Many also want your sub costs and payroll split out by trade class.

  • Your subs: Do you get COIs from every sub? What GL limits do you require? Do you use written contracts with a hold harmless clause? Are you an additional insured on their policies? What percent of your work do you sub out?

  • Your jobs: Your largest projects, average job size, and any work on roofs, above two stories, below ground, or on fire, water, or mold damage.

  • Your history: Past claims, lawsuits, and whether you've been accused of faulty work or breach of contract.

Answer every question honestly and completely. What you put on the application is what the carrier prices and covers. If your real work doesn't match it, you can face a surprise bill at audit or a fight when you file a claim. Gather your numbers before we talk, and I'll walk you through it.

My Checklist for Contractors

  • Don't skip it because it's optional. You're liable either way.

  • If you hold a state license, meet its minimum. A lapse can cost you your license and permits.

  • Match your jobs. If you bid commercial or GC work, plan on $1M / $2M with completed operations.

  • Know your carrier type. Ask: "Is this admitted or surplus lines?"

  • Get endorsements, not just paper. If a GC needs additional insured status, get the actual endorsement.

  • Fill the gaps. Review workers' comp, commercial auto, tools, and professional liability.

  • If you hire subs, collect their COIs before they start. Many carriers require it, and your application will ask whether you do. Depending on your policy, an uninsured sub can mean no coverage for their work or a bigger bill at audit.

  • Get sub COIs straight from their agent. Not from the sub. That way you know the policy is real and active.

  • Tell your agent exactly what you do. Answer the application and any supplemental honestly. A policy that doesn't match your work can leave you uncovered.

The Bottom Line

Every job, contract, and city can be different. A GC in Plano may ask for something a homeowner in Rowlett never would. Before you sign a contract or renew a policy, have a licensed Texas agent review your work, your license, and your contracts. If you'd like me to take a look, reach out to Dear Insurance Agency.

This guide is for general information only. It isn't legal advice, and it doesn't replace your actual policy. Rules change, so confirm current requirements with TDLR, TSBPE, TDI, and your city.

Sources

Texas laws and regulators:

Legal and business references:

 
 
 

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