Texas contractor insurance requirements

Electrical contractors (TDLR)

The Texas Department of Licensing and Regulation (TDLR) licenses electrical contractors. An applicant must employ a licensed master electrician. TDLR requires general liability insurance of at least:

• $300,000 per occurrence, combined for property damage and bodily injury.
• $600,000 aggregate for property damage and bodily injury.
• $300,000 aggregate for products and completed operations.

Electrical contractors and workers' comp

TDLR also requires an electrical contractor applicant to provide one of three things: proof of workers' comp coverage, a certificate of authority to self-insure, or a statement that the business has elected not to obtain coverage under Labor Code Chapter 406. If you choose not to carry it, you also have to file the nonsubscriber notice with TDI's Division of Workers' Compensation through Employer E-File.

Air conditioning and refrigeration contractors (TDLR)

TDLR requires A/C and refrigeration contractors to submit a certificate of insurance after passing the license exam, and TDLR says non-exempt A/C work must be done through a licensed contractor who holds the required liability insurance. The certificate must show the license holder's name and the business name. The minimums depend on the license class:

If you hold both A/C license classes

TDLR says a contractor with both Class A and Class B licenses can use a single policy for both, as long as it meets the Class A minimums. If you move up from Class B to Class A, raise your limits before the new license takes effect so there's no gap on file.

Plumbers: the responsible master plumber

Plumbing is licensed by the Texas State Board of Plumbing Examiners, not TDLR. Occupations Code Sec. 1301.3576 says a master plumber must give the board a certificate of insurance before working as a responsible master plumber (RMP). Under Sec. 1301.552, the certificate must be written by an insurer authorized in Texas or an eligible surplus lines insurer, provide commercial general liability coverage for property damage or bodily injury claims whether based on negligence or contract, and cover at least $300,000 for all claims in a one-year period.

Cities that require plumbing permits must verify through the board that the RMP has a certificate of insurance on file, so a lapse can stop permits. The board says an RMP must keep at least $300,000 of coverage while serving as RMP of record.

Public construction: workers' comp is required

Labor Code Sec. 406.096 requires any Texas governmental entity, including cities, that signs a building or construction contract to make the contractor certify in writing that it carries workers' comp for every employee on the project. Subcontractors must certify coverage through the general contractor. That includes remodeling, repair and demolition work, not just new construction.

If you bid public work even occasionally, line up workers' comp before you bid, because you'll need the certificate to sign the contract.

Keeping your certificate current

Because these requirements are tied to the license, a lapse in coverage is a licensing problem, not just an insurance problem. TDLR says non-exempt A/C work must go through a licensed contractor who holds the required liability insurance, and a city that issues plumbing permits must confirm the responsible master plumber's certificate is on file with the board before issuing one.

Put your renewal date on the calendar, ask your agent to send the updated certificate to the licensing agency at each renewal, and make sure the names on the certificate match the license holder and business exactly. If you change insurers mid-term, confirm the new certificate is on file before the old policy ends.

Your pre-bid insurance checklist

State minimums are only one layer. Before you sign a contract, check:

• Is my license's certificate of insurance on file and current with TDLR or the plumbing board?
• Does the contract require higher limits, additional insured status, or a waiver of subrogation?
• Does the city or county where I'm pulling permits have its own registration or insurance rules? Ask the permitting office.
• Is it a public project that triggers the workers' comp certificate under Labor Code Sec. 406.096?
• Do my trucks and trailers need commercial auto, or TxDMV motor carrier registration if they're over 26,000 pounds?
• If I'm a nonsubscriber, is my DWC Form-005 filed for this year?