General Liability Insurance Requirements by Contract

Short answer: Texas does not require most businesses to carry general liability insurance. The requirement almost always comes from a contract you signed, not from the state. What varies is which contract: a commercial lease, a subcontract from a general contractor, a vendor onboarding portal, a venue agreement, or a municipal bid packet. Each type asks for a different combination of limits and endorsements, and the endorsements are the part that costs money and takes time.

Owners tend to treat all of these as one problem called "they want a certificate." They are not one problem. A certificate is a piece of paper that describes coverage you already have. If the contract requires additional insured status with primary and non-contributory wording and a waiver of subrogation, and your policy does not carry those endorsements, no certificate can create them.

This guide covers where general liability insurance requirements in Texas actually originate, how to read an insurance clause line by line, what changes by contract type, and what the law lets a certificate say. If you need a certificate produced against coverage you already have, use the certificate request page.

Where the requirement actually comes from

Three sources, and they behave differently.

State trade licensing

Texas issues no statewide general contractor license. A general contractor in Houston and a general contractor in Lubbock are not licensed by the state, and the state does not tell either of them to carry liability insurance. Several regulated trades are the exception.

Electricians. Under 16 Texas Administrative Code Section 73.40, electrical contractors, electrical sign contractors, and residential appliance installation contractors must maintain general liability coverage of at least $300,000 per occurrence combined for property damage and bodily injury, at least $600,000 aggregate, and at least $300,000 aggregate for products and completed operations. The coverage must come from an admitted company, an eligible surplus lines carrier as defined in Insurance Code Chapter 981, or a carrier rated B+ or higher by A.M. Best. A certificate of insurance is filed with the department at initial licensing, at renewal, and on request.

Air conditioning and refrigeration. Under 16 Texas Administrative Code Section 75.40, Class A licensees must carry at least $300,000 per occurrence, $600,000 aggregate, and $300,000 products and completed operations aggregate. Class B licensees must carry at least $100,000 per occurrence, $200,000 aggregate, and $100,000 products and completed operations aggregate. A licensee who does not contract with the public may request a waiver in writing, but a licensee holding a waiver cannot perform or offer to perform contracting work for the general public.

Plumbing is licensed through the Texas State Board of Plumbing Examiners rather than TDLR, on its own terms.

Two things to keep in mind. These are licensing floors, not a recommendation about adequate limits. Many commercial contracts ask for more. And a lapse is a licensing problem in addition to a coverage problem, so a cancellation for nonpayment carries a second consequence.

City and county registration

Because there is no state general contractor license, municipalities fill the gap. Registration, permitting, bonding, and insurance requirements are set locally and vary substantially between jurisdictions. A contractor working across the Houston metro can be subject to several different sets of rules on the same week. Check the requirement in each jurisdiction where you pull permits rather than assuming the first one you registered in sets the standard. Our Houston contractor liability requirements page covers that market specifically.

Private contracts

This is the source of the overwhelming majority of general liability insurance requirements in Texas, and the one where the details actually matter.

How to read an insurance clause

Nearly every insurance requirement clause is built from the same components. Learn to spot them and you can price the requirement before you sign.

Limits. Per occurrence, general aggregate, and products and completed operations aggregate. Watch for a required per project aggregate, which gives each job its own aggregate rather than sharing one pool across all your work. Contractors running several jobs at once are increasingly asked for this by name.

Form type. Most contracts require an occurrence form rather than claims-made. An occurrence policy responds to injury or damage that took place during the policy period regardless of when the claim is reported, which matters enormously for completed operations claims that surface years after the work is done.

Additional insured. The requirement that the other party be covered under your policy for liability arising out of your work. Look for whether it demands ongoing operations only or ongoing and completed operations. Completed operations additional insured status is a separate endorsement and a separate cost, and construction contracts routinely require it while owners routinely fail to buy it.

Primary and non-contributory. Your policy pays first and does not ask the other party's insurer to share. Without this endorsement, your carrier and theirs may argue about contribution while everyone's defense costs run.

Waiver of subrogation. You give up your carrier's right to pursue the other party after paying a claim. Standard in construction and increasingly common in leases and vendor agreements.

Notice of cancellation. Often written as thirty days' notice to the certificate holder. In Texas this one has a legal constraint discussed below.

Carrier requirements. Frequently an A.M. Best rating floor such as A minus VII, and sometimes a requirement that the carrier be admitted in Texas. This one quietly rules out surplus lines placements, which is a real problem for higher-hazard operations that can only be written in the surplus market.

Other lines. Most clauses also require commercial auto, workers compensation with employers liability, and often umbrella or excess. Texas is the one state where workers compensation is elective for most private employers under the Labor Code, and nonsubscribers must file an annual report of noncoverage with the Division of Workers Compensation and give notice to employees. That does not help you here, because the contract requiring it is private and enforceable regardless of what state law makes optional.

Indemnity paragraph. Read this alongside the insurance paragraph, never separately. It is usually the more dangerous of the two.

The Texas Anti-Indemnity Act changes what the clause can do

Subchapter C of Chapter 151 of the Texas Insurance Code, commonly called the Texas Anti-Indemnity Act, took effect January 1, 2012 and applies to construction contracts as defined in the statute.

It voids an indemnity provision to the extent the provision requires an indemnitor to defend or indemnify an indemnitee against a claim caused by the indemnitee's own negligence or fault. That prohibition is not avoided by drafting around it with express negligence language or conspicuous type.

Critically, it extends to insurance. A provision in a construction contract requiring the purchase of additional insured coverage, and an additional insured endorsement itself, is void and unenforceable to the extent it provides coverage whose scope is prohibited for an indemnity agreement under the same subchapter.

What that means in practice for both sides:

If you are the party demanding coverage, the additional insured status you wrote into your subcontract may not reach your own negligence, and the certificate you collected does not change that. Relying on downstream insurance as your entire risk transfer strategy in Texas is thinner than it looks.

If you are the party providing coverage, you may have signed language broader than what Texas will enforce. That is not permission to ignore the clause. It is a reason to have counsel look at the indemnity and insurance provisions together before signing, because the negotiation is usually available and rarely attempted.

This is legal territory and this article is not legal advice. It is the reason to get a lawyer involved on any construction contract with real dollars attached.

What a certificate of insurance can and cannot say in Texas

Texas Insurance Code Chapter 1811 governs certificates of property and casualty insurance, and it is stricter than most out-of-state clients expect. TDI publishes a detailed FAQ that is worth reading in full if you handle certificates regularly.

A certificate cannot alter, amend, or extend policy coverage or terms. Section 1811.051. This is the master rule that everything else follows from.

Blanket endorsements cannot be converted into named status on the certificate. If your policy contains only a blanket additional insured endorsement, the certificate may state that the blanket endorsement exists, but it may not name the holder as an additional insured. Same rule for blanket waiver of subrogation. This surprises certificate holders constantly, and the agent declining is complying with the statute rather than being difficult.

A certificate cannot reference another contract's requirements. Section 1811.154. A job or contract number for identification is permitted. Language along the lines of coverage provided in accordance with the terms of a named contract is not.

Notice of cancellation must mirror the policy. Section 1811.155. A person has a legal right to notice only if named within the policy or an endorsement and the policy, endorsement, or a Texas law or rule requires the notice. A certificate cannot manufacture a thirty-day notice obligation that the policy does not contain.

Supplemental questionnaires and affidavits are not allowed. Chapter 1811 permits only TDI-approved certificates, and any document meeting the statutory definition of a certificate falls under the chapter. If your client sends a questionnaire for your agent to complete, the compliant path is for the agent to show the relevant policy language or provide a copy of the policy.

Risks located in Texas require a TDI-approved certificate form, regardless of where the certificate holder sits. Section 1811.052(b).

Penalties are real. Cease and desist orders, injunctive relief, administrative penalties, and civil penalties of up to $1,000 per infraction, and they can apply to certificate holders as well as agents and insurers.

The operational takeaway: fix the policy, not the paperwork. If the contract requires an endorsement, the endorsement has to be added to the policy, which requires carrier action and may involve additional premium and processing time. Our guide to additional insured versus certificate holder explains the distinction, and the same-day certificate guide explains what timing is realistic.

Requirements by contract type

Commercial lease

Landlords typically want general liability naming the landlord and any property manager as additional insured, a waiver of subrogation, and evidence of property coverage on your business personal property and tenant improvements.

The line owners miss is damage to premises rented to you, a sublimit on the general liability policy that is often $100,000 or $300,000. Some leases require $500,000 or more for this specific item. Because it may respond to covered fire damage caused by a tenant, it should be checked separately from the per occurrence limit. Our retail lease proof page walks through the usual landlord package.

General contractor subcontract

The heaviest requirements of any category. Expect an occurrence form, $1 million per occurrence with $2 million aggregate at minimum and frequently more, additional insured for ongoing and completed operations, primary and non-contributory, waiver of subrogation, a per project aggregate, an umbrella layer, commercial auto, workers compensation with employers liability, and an A.M. Best rating floor.

Two things to check before signing. Whether the required limits can be reached with a primary plus umbrella structure or whether the contract demands the primary itself carry the full limit, which is a far more expensive way to the same number. And whether your policy carries an action over exclusion, which removes coverage for exactly the scenario where an injured employee of a subcontractor sues up the chain. That exclusion appears frequently on inexpensive contractor policies and it defeats a large part of the reason the general contractor demanded coverage in the first place.

Vendor and supplier onboarding

Corporate procurement portals produce standardized requirements: $1 million per occurrence, additional insured, sometimes primary and non-contributory, and increasingly products and completed operations language for anyone selling goods. The friction here is rarely the coverage. It is the portal, which often rejects certificates for formatting reasons and sometimes asks for a supplemental questionnaire your agent cannot legally complete in Texas.

Events and venues

Venues typically require general liability naming the venue and often the property owner and municipality as additional insured, with liquor liability if alcohol is served. Liquor liability is a separate coverage and is excluded from standard general liability where the business sells, serves, or furnishes alcohol. Special event coverage exists for one-off needs.

Government and public entity contracts

Municipal, county, school district, and state contracts have their own insurance exhibits, and they are usually inflexible. Common additions include specific limits by line, additional insured status for the entity and its officers and employees, a waiver of subrogation, and occasionally a requirement that coverage be maintained for a stated number of years after completion. That last one is a real cost: maintaining coverage post-completion means keeping a policy in force after the revenue has stopped.

Professional services agreements

Clients hiring consultants, designers, agencies, IT providers, and similar firms often require both general liability and professional liability. These are different coverages. General liability responds to bodily injury and property damage. Professional liability responds to a claim that your advice or service was wrong and cost the client money. A general liability policy does not cover the second thing, and no endorsement makes it.

When you cannot meet the requirement

It happens, and the options are finite.

Negotiate the clause. More available than owners assume, particularly on limits, on whether an umbrella satisfies the requirement, and on carrier rating floors that would force you out of the surplus lines market. Ask before signing, not after.

Buy up. Frequently the cheapest path to a higher total limit is a modest primary plus an umbrella rather than a larger primary, because rate per million decreases as limits rise.

Add the endorsement. Additional insured, primary and non-contributory, waiver of subrogation, and per project aggregate are all things your carrier may be willing to add, for a price and on its own schedule. Start early.

Change carriers. If your current carrier will not issue completed operations additional insured status, or your form carries an action over exclusion the contract cannot live with, the answer is a different market rather than a different certificate.

Walk. Sometimes the insurance requirement is telling you the job is bigger than your program, and the honest move is to say so before you are on the hook.

A checklist for any new contract

• Which occurrence limit, general aggregate, and products and completed operations aggregate does it require?
• Does it require a per project aggregate?
• Occurrence form or claims-made?
• Additional insured for ongoing operations only, or ongoing and completed operations?
• Does it require primary and non-contributory wording?
• Does it require a waiver of subrogation?
• What notice of cancellation does it demand, and does your policy actually provide it?
• Is there an A.M. Best rating floor or an admitted carrier requirement?
• What is the damage to premises rented to you sublimit, if this is a lease?
• Does the indemnity paragraph reach the other party's own negligence, and has counsel read it against Chapter 151?
• Does it require workers compensation, and are you a nonsubscriber?
• Does it require coverage to be maintained after the work is complete, and for how long?
• Does your policy contain an action over exclusion?

Frequently asked questions

Does Texas require businesses to carry general liability insurance?

Not as a general matter. Texas has no statewide general contractor license and no blanket general liability mandate for businesses. Requirements come from three places: state trade licensing for regulated trades, city or county registration rules, and private contracts such as leases, subcontracts, and vendor agreements.

What are the state minimum liability limits for a Texas electrical contractor?

Under 16 Texas Administrative Code Section 73.40, electrical contractors, electrical sign contractors, and residential appliance installation contractors must carry at least $300,000 per occurrence combined for property damage and bodily injury, at least $600,000 aggregate, and at least $300,000 aggregate for products and completed operations, from an admitted carrier, an eligible surplus lines carrier, or a company rated B+ or higher by A.M. Best.

Can a certificate of insurance name my client as an additional insured if my policy only has a blanket endorsement?

No. TDI's certificates FAQ states that where the policy contains only a blanket additional insured endorsement, the certificate may say the blanket endorsement exists but may not name the holder as an additional insured. Under Insurance Code Section 1811.051, a certificate cannot alter, amend, or extend the coverage or terms of the policy.

Can a certificate of insurance reference my construction contract number?

It may list a job or contract number for identification only. Insurance Code Section 1811.154 prohibits a certificate from referencing a legal or insurance requirement contained in any contract other than the insurance policy itself, so language such as coverage provided in accordance with the terms of a named contract is not permitted.

My client sent a supplemental insurance questionnaire for my agent to complete. Is that allowed in Texas?

No. TDI's certificates FAQ addresses this directly: Chapter 1811 allows only TDI-approved certificates of insurance, and a supplemental questionnaire or an affidavit addressing contract insurance requirements falls within the statutory definition of a certificate. The agent may instead show the certificate holder the relevant policy language or provide a copy of the policy.

Does the Texas Anti-Indemnity Act affect the insurance requirements in my construction contract?

Yes. Subchapter C of Chapter 151 of the Texas Insurance Code, effective January 1, 2012, voids indemnity provisions in construction contracts to the extent they require the indemnitor to defend or indemnify the indemnitee for the indemnitee's own negligence or fault, and applies the same limitation to additional insured requirements and endorsements. The contract language and the enforceable protection are not always the same.

Where Argo fits

The work on an insurance requirement is not producing a certificate. It is reading the clause, confirming the policy can issue the endorsements the clause demands, and getting those endorsements on the policy before the deadline rather than after.

Argo Insurance is independent, so when a contract requires something your current carrier will not issue, we can go to carriers that will. Send the insurance exhibit from the contract along with your current policy and certificate, and we will tell you what you already satisfy, what is missing, what the missing pieces cost, and how long they take. For certificates against coverage you already carry, use the certificate request page, and for a full contractor review start with contractor liability coverage.

This article is general information about insurance requirements and is not legal advice. Contract terms, coverage, exclusions, and endorsements vary, and the policy issued controls.