Business Lines · Contractors
Contractors insurance in Texas: what general contractors actually require.
The thing that gets subs rejected usually isn't the limit on the policy. It's a missing endorsement.
The short version
Most Texas contractors need three things to work commercial jobs: general liability (commonly $1M per occurrence / $2M aggregate), commercial auto, and workers' compensation — even though Texas is the only state where comp is optional for private employers. The state doesn't require it. The general contractor's contract almost always does.
What actually gets subs rejected is the additional insured endorsement. A certificate naming the GC as certificate holder extends them no coverage at all. Only an endorsement does, and most commercial contracts require two: CG 20 10 for ongoing operations and CG 20 37 for completed operations. A contractor carrying only CG 20 10 gets the certificate bounced, usually the morning work is supposed to start.
Contract vs. State Law
Two different requirements, and confusing them is expensive.
Texas doesn't require workers' comp
It's the only state where private employers can opt out. Employers who do are called non-subscribers. See our workers' comp page for the full trade-off.
Public jobs are the exception
Under Texas Labor Code § 406.096, a governmental entity must require written proof of comp coverage for every employee on a building or construction contract. City, county, school district, and state work all count — and “construction” includes remodeling, repair, and demolition. A non-subscriber cannot work public jobs.
Private GCs require it anyway
There's a money reason on top of the liability one: if a sub can't produce proof of coverage, the GC's policy may be treated as covering those workers and the GC gets charged premium at audit. Uninsured subs cost them cash directly.
The same runs downhill to you
If you hire subs without coverage, their payroll can land on your audit. Collect certificates before work starts, not at renewal, and keep them — your auditor will ask for the ones covering the period.
Certificates
A certificate is not coverage.
A COI is a snapshot — evidence a policy existed the day it was issued. It grants nothing. Here's what actually matters on it.
- Certificate holder ≠ additional insured — holder just means they got a copy
- CG 20 10 — additional insured for ongoing operations
- CG 20 37 — completed operations, after you've finished and left
- Waiver of subrogation — gives up your carrier's right to pursue the GC
- Primary and non-contributory — your policy pays first
- All of it must be endorsed — typed words with no endorsement behind them are worthless
Read the contract before you buy the policy. The insurance requirements exhibit tells you exactly which endorsements, limits, and wording you need. Buying a generic GL policy and hoping it satisfies the contract is how contractors end up re-buying coverage mid-job.
Coverage Gaps
What general liability does not cover.
The gaps where contractors actually get hurt.
Your tools and equipment
GL covers damage you do to others, never your own tools. Stolen off a truck or a jobsite, that's a contractor's equipment floater — inland marine, a separate policy.
Materials not yet installed
Materials in transit or staged at the jobsite need an installation floater.
The structure under construction
That's builders risk. Usually the project owner carries it, but read the contract — it gets pushed to the contractor more often than people expect on renovation work.
Faulty workmanship itself
GL generally covers damage your faulty work causes to other property, not the cost of tearing out and redoing your own defective work. This is the most common source of “I thought I was covered.”
Straight Talk
When you need less than you think.
A BOP may be enough
If you're a small, low-hazard trade with a shop and modest payroll, a Business Owners Policy bundles GL and property for less than buying them separately.
But eligibility is about hazard, not size
Roofing, excavation, framing, tree work, height exposure, and heavy subcontracted labor typically can't go on a BOP at any size. A one-person roofing operation can be harder to place than a fifteen-person cabinet shop.
Sole proprietors may need very little
With no employees you don't need workers' comp in Texas at all. If a GC still demands proof, a minimum premium policy satisfies the contract — worth knowing before you're sold a full policy.
Sometimes you're just hard to place
Some trades get declined by every standard carrier. That's the class code, not your business. Those risks go to surplus lines through a wholesale broker — which an independent agency can reach and a captive agent structurally cannot.
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Contractors FAQ
Questions we hear often.
Does Texas require contractors to carry workers' compensation?
Not generally — Texas is the only state where private employers can opt out. But Texas Labor Code § 406.096 requires written proof of coverage on building or construction contracts with any governmental entity, and private general contractors require it by contract almost universally.
What's the difference between a certificate holder and an additional insured?
Certificate holder means they received a copy of the certificate — it grants no coverage. Additional insured is an endorsement on the policy that actually extends coverage to them for claims arising out of your work.
Why did the general contractor reject my certificate of insurance?
Most often a missing endorsement rather than a limit problem. The usual culprit is CG 20 37 (completed operations) when the contract requires both it and CG 20 10. Missing waiver of subrogation or primary and non-contributory wording does it too.
How fast can I get a certificate of insurance?
Certificate requests to Insurance Partner Group go out the same business day.
Does general liability cover my tools if they're stolen?
No. GL covers damage to others. Tools need a contractor's equipment floater — separate inland marine coverage.
Does my general liability cover work I have to redo?
Generally no. GL may cover damage your faulty work causes to other property, but not the cost of correcting your own defective work.
How much general liability do Texas contractors usually need?
$1M per occurrence / $2M aggregate is the common commercial contract requirement. Larger projects often require excess or umbrella limits on top.
My trade keeps getting declined. What now?
High-hazard class codes are often ineligible for standard markets regardless of how well the business is run. Those risks are placed in surplus lines through a wholesale broker, which requires an agency with those relationships.