Texas Contractor Insurance Requirements by Trade

Short answer: Texas contractor insurance requirements do not come from one place. Texas has no statewide general contractor license and no single statute ordering every contractor to buy liability coverage. The obligation comes from your trade license if you hold one, from the city or county where you pull permits, from whether the job is public or private, and from the insurance exhibit in the contract you signed. Most contractors are bound by two or three of those at once, and the strictest one governs.

That structure confuses people, and it should. A framing contractor in Houston and a licensed electrical contractor in the same neighborhood are under completely different rules, and neither of them is under a rule that came from the Texas Department of Insurance. TDI regulates insurers. It does not license contractors.

This guide sorts the requirements by where they come from. State trade licensing, workers compensation, public projects, local registration, and customer contracts. Then it covers what a compliant certificate actually has to say, because producing the right piece of paper is a separate problem from buying the right policy. If you need a certificate today, use the contractor certificate of insurance page.

First, what Texas does not require

Worth stating clearly because it causes more confusion than anything else on this page.

Texas does not issue a general contractor license at the state level. There is no state exam, no state bond, and no state insurance minimum for a general contractor, a remodeler, a home builder, a framer, a roofer, a painter, a concrete contractor, a landscaper, or a handyman. The Texas Department of Licensing and Regulation regulates a long list of industries, and general contracting is not one of them.

That is not permission to work uninsured. It means the requirement arrives from somewhere else, usually from a city ordinance or from the party paying you. It also means the phrase licensed and insured, used by a general contractor in Texas advertising, is describing a local registration and a voluntary purchase rather than a state credential.

Trades the state does license, and what they must carry

Three programs set insurance minimums that function as a hard floor.

Air conditioning and refrigeration contractors. TDLR requires commercial general liability insurance at all times while the license is active, from an insurance provider authorized to sell liability insurance in Texas, proven by a certificate of insurance listing both the license holder name and the business name. The minimums split by class.

A Class A license, which allows work on any size unit, requires 300,000 dollars per occurrence for property damage and bodily injury, 600,000 dollars aggregate for property damage and bodily injury, and 300,000 dollars aggregate for products and completed operations.

A Class B license, limited to cooling systems of 25 tons and under and heating systems of 1.5 million BTUs per hour and under, requires 100,000 dollars, 200,000 dollars, and 100,000 dollars for the same three categories. A contractor holding both classes can satisfy both with one policy as long as it meets the Class A figures.

Two operational details that catch people. TDLR states there is no inactive status for an ACR license, so a contractor who stops working cannot simply let the policy lapse. They have to request a waiver of insurance and still renew the license. And if the business name changes, a new certificate of insurance is required along with the change fee.

Electrical contractors. TDLR requires business liability insurance of at least 300,000 dollars per occurrence combined for property damage and bodily injury, at least 600,000 dollars aggregate, and at least 300,000 dollars aggregate for products and completed operations, submitted on the department's own Electrical Contractor Certificate of Insurance form with the application.

The electrical contractor application also forces a workers compensation decision on paper. You must provide proof of workers compensation coverage, a certificate of authority to self insure, or a statement that you have elected not to obtain coverage under Subchapter A, Chapter 406 of the Labor Code. If you elect not to carry it, you must file a notice of no coverage with the Texas Department of Insurance; Employer E-File is one filing method. An electrical contractor also has to employ a licensed Master Electrician of record, and must designate a replacement within thirty business days if that person leaves.

Responsible Master Plumbers. The Texas State Board of Plumbing Examiners requires proof of a minimum of 300,000 dollars of commercial liability insurance to obtain the RMP designation, and describes maintaining at least 300,000 dollars of general commercial liability insurance as part of the RMP's general supervision and management duty. That duty also covers pulling permits, requesting code inspections, confirming everyone performing plumbing work holds a current license or registration, keeping a licensee present and directly supervising any job site where registrants are working, and displaying the company name and RMP license number on service vehicles. An RMP may act as RMP of record for only one company at a time.

If you run one of these trades, see the pages for electrical contractor insurance and HVAC contractor insurance for how the license minimum interacts with the rest of the program.

Workers compensation, which splits on public versus private

Texas is unusual here and contractors who moved from another state get it wrong constantly.

Most private employers in Texas may choose not to carry workers compensation. A nonsubscriber has obligations that come with the choice. Employer E-File is one way to file the DWC Form-005 notice, and TDI lists other submission methods. Filing is required within thirty days of hiring a first employee, within ten days of terminating coverage, and annually between February 1 and April 30 for any nonsubscriber with one or more employees who are not exempt. Nonsubscribers must also post notice of no coverage in the workplace in English, Spanish, and any other language needed.

Declining coverage also means giving up the exclusive remedy protection that workers compensation provides. A nonsubscriber can be sued directly by an injured employee, without the common law defenses an employer would otherwise have. That exposure is what employer liability and stop gap coverage exists to address, and it is a live question for any Texas contractor with a field crew.

Public work is not optional. Texas Labor Code Section 406.096 requires a governmental entity entering a building or construction contract to require the contractor to certify in writing that it provides workers compensation coverage for each employee working on the public project. Every subcontractor on the project has to provide a certificate covering its own employees to the general contractor, who provides it to the governmental entity. Coverage may be provided through a group plan or another method satisfactory to the governing body. The statute defines building or construction broadly, reaching erection of buildings, bridges, roadways, and public utility facilities, along with remodeling, extending, repairing, demolishing, or otherwise improving real property.

There is also a written agreement path worth knowing. Texas Labor Code Section 406.123 lets a general contractor and a subcontractor agree in writing that the general provides workers compensation coverage to the sub and the sub's employees, and requires the general to file a copy of that agreement with its carrier no later than the tenth day after the contract is executed. Failing to file is an administrative violation. The statute also treats a general contractor as the employer of a subcontractor who has no employees, for purposes of the act.

Local registration, which is where most general contractors actually get caught

Because the state does not license general contractors, cities and counties fill the gap. Requirements vary by jurisdiction and they change. A city may require registration to pull permits, may require a general liability minimum as a condition of that registration, and may require a bond. A homeowners association or a commercial property manager may add its own requirements on top.

There is one statewide limit worth knowing. Since September 1, 2021, Texas Occupations Code Section 1302.304 prohibits a municipality from charging registration fees to TDLR licensed air conditioning and refrigeration contractors, though the city may still collect building permit fees.

The practical rule is to check the requirement for each jurisdiction you pull permits in, before you bid there, not after. For the Houston area specifically, start with the Houston contractor general liability requirements page.

Customer contracts, which are the strictest requirement most contractors face

For a commercial contractor, the license minimum is almost never the binding constraint. The insurance exhibit in the prime contract or subcontract is. Typical demands include the following.

Higher limits. One million per occurrence and two million aggregate is a common opening position, with larger projects asking for more, often through an umbrella at a stated attachment point.

Additional insured status, frequently on both an ongoing operations and a completed operations basis. Adding a party as a certificate holder does nothing. Adding them as an additional insured changes who the policy protects, and it takes an endorsement.

Primary and noncontributory wording, so your policy pays first rather than sharing with the upstream party's policy.

Waiver of subrogation, giving up your carrier's right to recover from the other party after paying a claim.

Per project aggregate, so one bad job does not exhaust the aggregate limit protecting every other job you have open.

Products and completed operations maintained for a stated number of years after the work is finished, which matters because the claim usually arrives long after the last inspection.

Notice of cancellation to the contracting party, and sometimes a specific carrier financial rating.

Each item is a real endorsement, most carry a real charge, and none of them can be produced retroactively after a claim. The full breakdown is in general liability requirements by contract type, and the difference between the two most confused terms is in additional insured versus certificate holder.

What Texas law will not let a contract demand

Texas Insurance Code Chapter 151, the construction anti indemnity provisions, makes a provision in a construction contract void and unenforceable as against public policy to the extent it requires an indemnitor to indemnify, hold harmless, or defend another party against a claim caused by that party's own negligence, breach of a statute or regulation, or breach of contract. The same subchapter voids a requirement to purchase additional insured coverage, and any endorsement providing it, to the extent the coverage is broader than what the indemnity rules allow.

There is a significant exception. The act does not void a provision requiring an employer to indemnify another party for bodily injury or death of that employer's own employee, agent, or subcontractor. That preserves the ordinary construction principle that each party answers for its own workers.

The practical takeaway is not that you can ignore an aggressive indemnity clause. It is that the clause may not reach as far as it appears to, and that the endorsement your customer demanded may be partially unenforceable in Texas even after you pay for it. Get the clause read before you sign, not after the claim.

Coverage requirements are not the same as a compliant certificate

A contractor can hold exactly the right policy and still fail a compliance check, because the certificate is a separate document with its own failure modes. The common ones.

The named insured on the certificate does not match the entity on the contract. A contractor operating through an LLC while the policy names the individual, or the reverse, produces a certificate the general contractor's compliance software rejects.

The additional insured endorsement is referenced but not attached, or is attached in a form that covers ongoing operations only when the contract asked for completed operations too.

The certificate shows the license minimum rather than the contract minimum, because nobody told the agent what the contract required.

Products and completed operations shows as excluded, which is the coverage the customer cares most about on finished work.

The policy period expires mid project with no renewal certificate queued, which on many jobs stops payment applications rather than the work.

Fixing any of these takes hours if you catch it at bid time and weeks if you catch it at the pay application.

A checklist before you bid

• Do you hold a TDLR or TSBPE license, and does the policy currently on file meet that program's minimum
• Is the certificate on file with the licensing agency current, and does the business name on it match the license
• Does every city and county you will pull permits in require registration, and does that registration carry an insurance minimum
• Is the project public, and if so do you and every sub have workers compensation certification ready for the governmental entity
• If you are a nonsubscriber, is your Employer E-File notice current and the workplace notice posted
• Have you read the insurance exhibit in the contract, including limits, additional insured basis, primary and noncontributory, waiver of subrogation, and per project aggregate
• Does your current policy actually contain those endorsements, or only the coverage
• Are you collecting a current certificate from every subcontractor, with the same endorsements you were asked to provide upstream
• Does your general liability carry products and completed operations, and for how long after the work
• Is the policy admitted or surplus lines, and do you know which one you bought

Where Argo fits

Argo Insurance is an independent agency in Texas, so we read the contract before we quote the policy. That order matters more in construction than in any other class we write, because the requirement almost always comes from the customer rather than from the state, and the policy that satisfies a TDLR minimum frequently does not satisfy the subcontract sitting on your desk.

Send us the insurance exhibit from the job you are bidding, your trade license numbers, your payroll and receipts, and your loss runs. We will tell you what the contract is actually asking for, whether your current policy produces it, and what it costs to close the gap. Start with a contractor general liability quote, or a business insurance review if the whole program needs a look.

Coverage descriptions here are general. Rates, eligibility, limits, exclusions, and endorsements vary by carrier and by risk, and the policy issued controls.

Common questions about this coverage

Does Texas require a general contractor to carry insurance?

Texas does not issue a statewide general contractor license, and there is no single statute that orders every contractor in the state to buy general liability insurance. Requirements can come from a regulated trade license, a local registration or permit rule, or the customer contract. Check those sources for your trade and project before buying coverage.

How much liability insurance does a Texas HVAC contractor need?

TDLR requires a Class A air conditioning and refrigeration contractor to carry 300,000 dollars per occurrence and 600,000 dollars aggregate for property damage and bodily injury, plus 300,000 dollars aggregate for products and completed operations. Class B is 100,000 dollars, 200,000 dollars, and 100,000 dollars. Coverage has to stay in force for the whole time the license is active and must come from an insurer authorized to sell liability insurance in Texas.

What insurance does a Texas electrical contractor license require?

TDLR sets business liability minimums of 300,000 dollars per occurrence combined for property damage and bodily injury, 600,000 dollars aggregate, and 300,000 dollars aggregate for products and completed operations, proven on the department's own certificate of insurance form. The application also requires either proof of workers compensation coverage, a certificate of authority to self insure, or a statement electing not to carry it under Chapter 406 of the Labor Code.

Do Texas plumbers have an insurance requirement?

A Responsible Master Plumber does. The Texas State Board of Plumbing Examiners requires proof of at least 300,000 dollars of commercial liability insurance to obtain the RMP designation, and treats maintaining that coverage as part of the RMP's general supervision and management duty along with pulling permits, requesting inspections, and confirming that everyone performing plumbing work holds a current license or registration.

Is workers compensation required for Texas construction work?

Not for most private work. Texas lets private employers decline coverage, and a nonsubscriber must file a notice of no coverage with the Division of Workers Compensation and post notice for workers. Employer E-File is one filing method. Public work is different. Texas Labor Code Section 406.096 requires a governmental entity entering a building or construction contract to obtain written certification from the contractor that every employee on the project is covered, with subcontractor certificates passed up through the general contractor.

Can a customer contract require more insurance than my license does?

Almost always, and it usually will. License minimums are a regulatory floor, not a commercial standard. A general contractor or property owner can demand higher limits, additional insured status on an ongoing and completed operations basis, primary and noncontributory wording, a waiver of subrogation, and a per project aggregate. Texas Insurance Code Chapter 151 limits how far an indemnity or additional insured demand can reach, but it does not cap the limits a customer can ask for.

Verify current Texas rules

Requirements and policy forms can change. Check the current agency guidance before relying on a number or filing step:

• TDLR HVAC contractor application
• TDLR electrical contractor application
• TSBPE Responsible Master Plumber requirements