Business insurance in Texas

Workers' compensation is optional for most private employers

In Texas, private employers can choose whether to carry workers' compensation insurance; it isn't required in most cases. Employers without it, often called nonsubscribers, must report to the state that they don't have coverage, and if they have five or more employees who aren't exempt, must report work-related injuries resulting in more than one day of lost time, illnesses and deaths.

Going without coverage has tradeoffs: nonsubscribers can be sued by injured employees and may lose some legal defenses. Some contracts, especially government work, require coverage. Talk to a licensed professional before deciding.

Storms and your property

Commercial property policies may exclude or limit wind and hail on the coast; TWIA sells commercial wind and hail coverage in its designated area. Flood needs separate coverage. Business income coverage can replace lost revenue after a covered loss.

If you choose not to carry workers' comp

Nonsubscribers have a calendar to keep. DWC Form-005 is due every year between February 1 and April 30, within 30 days of hiring your first employee, and within 10 days of dropping coverage. Employers with five or more non-exempt employees also file DWC Form-007 for injuries keeping someone off work more than one day, work-related illnesses and deaths.

Under Labor Code Sec. 406.033, a nonsubscriber sued by an injured employee can't argue contributory negligence, assumed risk or a co-worker's negligence. Our nonsubscriber guide covers the notices, the deadlines and the questions to ask before deciding.

Licenses that require insurance

Some Texas trade licenses can't be held without insurance on file. TDLR requires electrical contractors to carry at least $300,000 per occurrence and $600,000 aggregate in general liability, plus $300,000 for products and completed operations. A/C and refrigeration contractors need the same for Class A, or $100,000 and $200,000 for Class B. A responsible master plumber must file a certificate showing at least $300,000 in commercial general liability with the plumbing board.

On any building or construction contract with a Texas governmental entity, Labor Code Sec. 406.096 requires certified workers' comp for every employee on the project, including subcontractors' employees.

Business vehicles

TDI's auto guide lists driving for business among the things most personal auto policies don't cover. If you run vehicles over 26,000 pounds, carry more than 15 passengers, haul placarded hazmat or move household goods for pay, TxDMV requires a USDOT number, a TxDMV number and liability coverage filed on Form E, at least $500,000 for most heavy trucks.

Documents to gather before a quote

Having these ready speeds up a business insurance quote and makes comparisons fairer:

• Your legal entity name, FEIN and NAICS code (DWC Form-005 asks for the NAICS code too).
• Annual revenue, payroll by job type, and number of employees.
• Any TDLR or plumbing board license numbers and the insurance minimums tied to them.
• Contracts or leases with insurance requirements, such as additional insured or waiver of subrogation wording.
• A vehicle list with VINs, weights and drivers, plus USDOT and TxDMV numbers if you have them.
• Three to five years of loss history from current or prior insurers.