Insurance questions come up constantly in this business – what you need, what it costs, what actually gets covered when something goes wrong. Below are the answers Contractors Insurance Houston gives contractors most often. Don't see your question? Call us at 713-388-6681 and we'll get you a straight answer.
Texas does not require general liability insurance for contractors by state law, and Texas is the only state where workers' compensation is optional for most private employers. In practice, however, general contractors, project owners, commercial landlords, and municipalities almost always require proof of general liability coverage – typically $1 million per occurrence – before a contractor can start work. So while the state doesn't mandate it, the market does.
Most contractors carry four core coverages: general liability (required by nearly all GCs and project owners), commercial auto (legally required for business vehicles in Texas), workers' compensation or a non-subscriber alternative, and an inland marine policy covering tools and equipment. Depending on the work, contractors may also need builders risk, professional liability, pollution liability, or surety bonds.
Most small Texas contractors pay between $800 and $3,500 per year for a $1M/$2M general liability policy. Rates vary by trade: a handyman or electrician may pay under $1,500, while roofers commonly pay $3,000–$15,000+ because of the height exposure. Payroll, revenue, subcontractor use, and claims history drive the final premium.
| Coverage Type | Typical Annual Cost | Notes |
|---|---|---|
| General Liability ($1M/$2M) | $800 – $3,500 | Varies widely by trade and revenue |
| Commercial Auto (per vehicle) | $1,500 – $3,000 | Higher for trucks towing trailers |
| Workers' Compensation | $3 – $30 per $100 of payroll | Rate depends on trade class code |
| Builders Risk | 1% – 4% of project budget | Higher for ground-up frame construction |
| Commercial Umbrella | $400 – $1,500 per $1M | Sits on top of your existing GL and auto |
| Performance/Payment Bonds | 1% – 3% of contract value | Driven mostly by credit and financials |
Contractor general liability covers third-party bodily injury, third-party property damage, and completed operations – meaning damage that shows up after the job is finished. Example: a plumber's soldering work causes a fire two months after completion; completed operations coverage responds. It does not cover injuries to your own employees (that's workers' comp), your own tools (inland marine), or defective workmanship itself.
Yes. General contractors in Texas almost universally require subcontractors to carry their own general liability policy and to provide a certificate of insurance, usually with the GC named as additional insured. If a sub is uninsured, the GC's insurer will typically charge the GC for that sub's payroll at audit, so hiring uninsured subs directly raises the GC's premium.
A certificate of insurance is a one-page document proving your coverage is active, showing your limits, carrier, and policy dates. GCs and project owners request COIs before allowing you on site. Contractors Insurance Houston can typically issue a standard COI same-day, and additional-insured certificates within 24 hours.
Naming a GC or project owner as additional insured extends your liability policy to protect them if they're sued because of your work. It's standard in nearly every Texas construction contract. Most contractor GL policies can add blanket additional insured endorsements for $100–$300 per year, which is far cheaper than adding parties one at a time.
Online insurers quote from one carrier's appetite; an independent agency like Contractors Insurance Houston shops multiple carriers that compete for your class of work. For contractors this matters because carrier appetite varies sharply by trade – the carrier with the best roofer rates is rarely the best for electricians. An independent agent also handles COIs, audits, and mid-term changes, which direct-to-consumer platforms handle poorly.
Texas workers' comp premiums are set per $100 of payroll and vary dramatically by trade class code. Carpentry runs roughly $6–$12 per $100 of payroll, electrical work $3–$6, plumbing $4–$7, and roofing $15–$30 – the highest of any common trade. A roofing crew with $200,000 in payroll can expect $30,000–$60,000 per year, while an electrical shop with the same payroll might pay $6,000–$12,000.
Texas contractors typically pay $1,500–$3,000 per vehicle per year for commercial auto with $1M combined single limit – the limit most GC contracts require. Pickups and vans on the lower end; dump trucks and vehicles towing equipment trailers on the higher end.
Builders risk typically costs 1%–4% of the total construction budget for the policy term. A $500,000 ground-up build usually runs $5,000–$20,000 depending on construction type, location, and term length. Interior build-outs and renovations price lower than ground-up frame construction.
Bid bonds are usually free or under $100. Performance and payment bonds typically cost 1%–3% of the contract value, so a $1M bonded job costs roughly $10,000–$30,000 in bond premium, driven mostly by the contractor's credit and financials. Contractors with strong financials pay at the low end.
$1M/$2M means the policy pays up to $1 million for any single occurrence and up to $2 million total across all claims in the policy year. It's the standard limit requirement in Texas construction contracts. Larger commercial projects increasingly require $5M, usually satisfied by stacking a commercial umbrella on top of the base $1M policy.
Contractors typically pay $400–$1,500 per year per $1 million of umbrella coverage. It's the cheapest way to meet contracts requiring $2M–$5M limits, because the umbrella sits over your existing GL, auto, and employer's liability rather than replacing them.
The biggest premium drivers are trade type (height and fire exposure cost more), payroll and revenue size, claims history, subcontractor usage without certificates, years in business, and whether work is residential or commercial. New ventures (under 3 years) and contractors with open claims pay meaningfully more until they build clean history.
Yes. Most carriers offer monthly installments with 10%–25% down, and pay-as-you-go workers' comp programs tie your premium to actual payroll each month, which prevents large audit bills and helps cash flow on seasonal work.
Yes. Texas is the only state that allows most private employers to opt out of workers' compensation entirely (called being a "non-subscriber"). But non-subscribers lose important legal defenses and can be sued directly by injured employees with no damage caps, which is why most contractors either carry workers' comp or a structured non-subscriber occupational accident program rather than going bare.
Public projects in Texas typically require general liability at $1M/$2M, statutory workers' compensation (non-subscriber plans are usually NOT accepted on public work), commercial auto at $1M, and performance/payment bonds on contracts over $100,000 (payment bond) and $25,000 (performance bond) under Texas Government Code Chapter 2253.
Texas doesn't license general contractors at the state level, but licensed trades do carry insurance requirements: Texas electricians must carry $300,000 combined GL (with $1M aggregate) to hold a contractor license, and licensed plumbing contractors must carry at least $300,000 in liability coverage. Cities may layer additional requirements for permits.
Standard builders risk covers wind unless specifically excluded, but many Texas coastal-county policies carry separate wind deductibles (often 1%–5% of project value), and flood is almost always excluded – it requires a separate flood policy or endorsement. Contractors working inside floodplain areas should confirm both wind and flood terms before starting exterior work in hurricane season.
Contractor GL and workers' comp premiums are estimates based on projected payroll and revenue; at year-end the carrier audits actual figures and bills or refunds the difference. The most common audit surprise in Texas is uninsured subcontractor payroll being added to your own – always collect COIs from every sub and keep them on file.
A general contractor typically carries $1M/$2M general liability with completed operations, commercial auto, workers' comp, an umbrella sized to contract requirements ($1M–$4M extra), builders risk on ground-up projects, and bonding capacity for public or large private work. GCs managing subs should also verify every sub's COI and additional-insured status – it's the single biggest controllable cost factor at audit.
A small GC doing $500K–$1M in revenue typically pays $3,000–$8,000 per year for general liability, roughly 0.5%–2% of revenue depending on the residential/commercial mix and sub usage. Add commercial auto, umbrella, and workers' comp and total insurance spend commonly lands between 2% and 5% of revenue.
Your completed operations coverage generally extends to work performed on your behalf by subs – which is exactly why carriers charge you for uninsured sub payroll. But your policy is not a substitute for the sub's own insurance: contractual risk transfer (subs carrying their own GL, naming you additional insured, signing indemnity agreements) is what keeps your losses and premiums down.
Owner's and Contractors Protective (OCP) is a standalone policy a contractor buys to protect a specific project owner. Wrap-ups (OCIP/CCIP) are master programs where the owner or GC insures every contractor on a large project under one policy. If you're enrolled in a wrap, your own GL usually excludes that project – make sure your certificates and pricing reflect it.
Roofing combines the two exposures carriers price highest: falls from height (driving workers' comp rates of $15–$30 per $100 of payroll) and fire/water damage claims (driving GL rates). Texas hail litigation also makes carriers cautious. Expect $3,000–$15,000+ per year for GL alone, and know that many standard carriers decline roofing entirely, which is why roofers benefit most from an independent agent with specialty markets.
GL covers damage your operations cause, not the hail damage you're hired to repair. Torch-down and hot-tar work is often excluded or surcharged on standard policies; if you do any heat-applied roofing, disclose it up front so the policy actually responds. An undisclosed torch exclusion is one of the most common reasons roofing claims get denied.
Framers need GL with completed operations (structural failures surface late), workers' comp at carpentry class rates (~$6–$12 per $100 payroll), and inland marine for tools left on open job sites. GCs frequently require framers to carry $2M aggregate given the structural nature of the work.
A small electrical contractor typically pays $500–$1,600 per year for general liability, among the lowest of any trade. Texas requires licensed electrical contractors to carry at least $300,000 per occurrence/$1M aggregate, but nearly all commercial work contractually demands the full $1M/$2M – the cost difference is usually small enough that $1M/$2M is the smart default.
Texas plumbing contractors typically pay $600–$2,000 per year for general liability at $1M/$2M. Water damage is the dominant claim source, so carriers look closely at whether you do new construction, service work, or gas lines. Texas State Board rules require licensed plumbing contractors to maintain at least $300,000 in liability coverage.
Yes – this is completed operations coverage, and it's the most important part of a plumber's or electrician's policy. A failed fitting that floods a house six months later, or wiring that causes a fire the following year, falls under completed operations as long as the policy (or a properly maintained successor policy) is in force when the claim is made against you. This is why letting a policy lapse between jobs is dangerous even when you're not actively working.
Standard GL excludes pollution, and sewage backups are frequently treated as pollution events. Plumbers doing sewer line, septic, or drain work should add a contractor's pollution liability endorsement or standalone policy, often only a few hundred dollars per year, and it closes the most common uncovered-claim gap in the trade.
Document the scene with photos, get names and contact information of anyone involved, do not admit fault or negotiate directly with the property owner, and call your agent the same day. Late reporting is a leading cause of claim friction; early reporting almost always produces better outcomes.
One paid claim typically raises contractor GL premiums 10%–30% at renewal for 3-5 years; multiple claims can push you into higher-cost specialty markets. Small property-damage incidents below or near your deductible are often better paid out of pocket – Contractors Insurance Houston can run that math with you before you file.
For most trades, a Texas contractor with clean history can be quoted, bound, and holding a certificate of insurance within 24–48 hours – same-day is often possible for standard classes like electrical, plumbing, and handyman work. Roofing and new ventures take longer because fewer carriers compete for them.
Reach Contractors Insurance Houston at 713-388-6681 or request a quote below and we'll help you find coverage that actually fits your business.