Choose the Right Business Insurance for Your Texas Business

Texas is a business powerhouse, the Lone Star state features a healthy, developed economy that includes technology, energy, agriculture, and manufacturing. Being the second-largest state in the United States, Texas offers a beneficial business climate marked by low taxes and a robust workforce, appealing to companies and entrepreneurs alike. As the backbone of American industry, Texas has over 3.1 million small businesses that provide jobs for almost half of the state's private workforce. Naturally, these enterprises throughout Texas—from Houston to Dallas—rely on thorough insurance policies to guard against unexpected events such as job-related injuries or property damage.

No matter if you operate a startup in Austin or oversee an established business in San Antonio, securing the appropriate business insurance is essential for sustaining financial stability and achieving enduring success in the Lone Star State.

Regulations for Business Insurance in Texas at the Federal and State Levels

Although federal regulations establish basic standards for businesses across the country, Texas has distinct requirements that pertain specifically to the state. Interestingly, Texas is the sole state that does not require private employers to offer workers' compensation insurance. Nevertheless, high-risk industries like construction frequently choose to voluntarily implement workers' compensation to handle expensive legal disputes and medical claims. Some private firms in business dealings with the state government of Texas do have to have workers' comp insurance. Most businesses are not mandated to carry general liability insurance either. But we strongly advise you to protect your business against potential liability from third-party bodily injuries, property damage, or personal and advertising injury.

Industries Insured in Texas

A wide variety of industries in Texas benefit from tailored insurance policies, including:

• Oil and Gas
• Construction and Contracting
• Real Estate and Property Management
• Technology and IT Services
• Retail and E-commerce
• Health and Wellness
• Professional Services (e.g., Legal, Consulting, Accounting)
• Hospitality (e.g., Restaurants, Hotels)
• Creative and Marketing
• Services (e.g., Cleaning, Repairs, Landscaping)

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In the state of Texas, there’s only commercial auto insurance you must carry. While Workers’ compensation insurance is optional. However, as certain high-risk companies do need this insurance, we have included it in our essential policies list.

Essential Insurance Policies in Texas:

Based on your organization's unique requirements and functions, you might need different kinds of business insurance. Some policies are voluntary, whereas others are required by Texas law. Here are crucial insurance policies that are important for companies in this amazing state:

1. Workers' Compensation Insurance

In contrast to numerous states, Texas does not require private companies to obtain workers’ compensation insurance. Nevertheless, it is highly advised since this insurance shields both employers and employees from financial hazards related to job injuries or health issues. Workers' compensation assists with medical bills, lost earnings, and rehabilitation expenses for employees who are injured. Furthermore, it restricts employer responsibility in cases of workplace injury claims.

Nonetheless, employers can choose to forgo workers’ compensation coverage, but they are required to inform the Texas Department of Insurance (TDI) and provide written notification to employees. Businesses not subscribed to workers' compensation insurance could be held entirely responsible for all costs associated with an employee's work injury—such as medical expenses, lost wages, pain and suffering, and legal fees—if the employee can demonstrate that the employer's negligence caused the injury. This could result in substantially higher payouts than a typical workers' compensation policy premium.

Although it's not required, Texas companies ought to think about workers' compensation since it aids in handling the substantial expenses of medical care and possible lawsuits, including those from machinery accidents, falls, or repetitive strain injuries.

Commercial Auto Insurance

Texas legislation mandates that all vehicles for use on public roads must have auto insurance, both personal and business owned vehicles. This insurance shields businesses from the financial consequences of at-fault accidents involving vehicles owned or operated by the company. The Texas Department of Motor Vehicles was established in 2009 to oversee the administrative duties of vehicle registration, dealer oversight, permit distribution, and additional responsibilities tied to both intra and interstate commerce. The minimum required limits of auto liability coverage are:

• $30,000 liability for bodily injury per individual. on
• $60,000 liability for bodily injury for each accident.
• $25,000 liability for property damage per incident.

Companies that have employees that use their personal auto for work-related activities (such as bank trips or client visits) should consider Hired and Non-Owned Auto Insurance (HENO), which can be incorporated into a commercial auto policy or sometimes, a General Liability or Business Owner’s policy. Although PIP (Personal Injury Protection) is required on most auto insurance policies in Texas, you have the option to complete a waiver form to reduce your premium and forgo this coverage.

In the absence of commercial auto insurance, companies are responsible for covering all medical expenses, vehicle repairs, and possible legal actions resulting from accidents. Breaches of Texas insurance regulations may lead to fines, vehicle registration suspension, or other legal consequences. Remember this.

Non-Essential Recommended Insurance Policies:

In Texas, certain insurance policies are not mandated by law. However, considering the business contingencies, they are highly recommended by us to safeguard your business against potential risks and liabilities. Here are some key non-essential but advisable insurance policies for businesses operating in this Lone Star State:

General Liability Insurance

General liability insurance protects your business from liability claims involving bodily injury, property damage, and personal or advertising injury resulting from your business’s negligence during your normal business operations. For instance, if a customer slips and falls on your business premises and is hurt, this policy can respond to a claim or lawsuit that follows. Although not legally required in Texas, it is highly recommended for businesses to mitigate potential financial losses. To enhance coverage, you can opt for excess liability or umbrella liability, which provides additional limits of coverage over and above your General Liability Insurance limits.

Professional Liability Insurance

Also known as errors and omissions (E&O) insurance, professional liability insurance safeguards businesses that provide professional services or advice against claims of negligence, misrepresentation, or mistakes in work that result in a financial loss to your client or others. This coverage is particularly important for service-based businesses, such as accountants, real estate agents, lawyers, and IT professionals, to protect against potential lawsuits stemming from their professional services. Any business that provides advice or services that could lead to financial or reputational harm for a client if performed incorrectly or negligently should strongly consider professional liability insurance even if this coverage is not mandatory in Texas. It makes for a good addition in your protection system, in as much as your business credibility increases, which also improves chances for securing more business deals.

Cyber Liability Insurance

With the increasing reliance on digital operations, and many IT companies emerging in Texas, cyber liability insurance has become crucial for businesses of all sizes. This policy covers third-party claims resulting from data breaches, cyberattacks, and other cyber-related incidents. It can also help cover costs related to ransom, customer notification, credit monitoring, legal fees, and fines associated with data breaches. Given the rise in cyber threats, having this coverage can be vital for business continuity. As this coverage matures, as a customer, you have ample choices in selecting coverage specific to your business requirements such as:

Coverage includes:

• Social Engineering
• Ransomware
• Defense costs
• Liability to third parties
• Fraudulent money transfers
• Denial of service loss
• Damage to hardware or networks

Business Owner’s Policy (BOP)

A Business Owner's Policy combines general liability and commercial property insurance into a single package, often at a more affordable rate than purchasing the policies separately. As a sweet deal in Texas, this policy is ideal for small to medium-sized businesses, providing coverage for property, business interruption, and liability. While not mandatory, a BOP offers comprehensive protection against common risks faced by businesses. Reach out to one of our agents to review your business insurance needs.

Texas Agricultural Insurance

When it comes to agriculture and livestock, these industries are at the top of the list in Texas. They play an important role in the food and meat industries and will continue to do so. These livestock are assets for ranchers and farmers alike, who must take good care of their farm property, along with all the basic equipment to boot! Crop and livestock risk insurance forms a staple part of the overall agriculture insurance package that is provided in this state.

How Much Does Business Insurance Cost in Texas?

On average, small businesses in Texas pay around $80 to $90 per month for a basic general liability policy. However, costs fluctuate widely depending on the specific coverage purchased and the nature of the business, industry risks, and coverage options. If you include workers' comp insurance, your per month costs go up to $120. So, it just boils down to what your business actually needs.

FKey Factors Affecting Insurance Premiums in Texas:

Type of Business and Its Risks:

Industries with higher inherent risks, such as construction or manufacturing, which have higher exposures to loss, tend to pay more for insurance compared to lower-risk professions like consulting or marketing.

Business Revenue and Location:

Companies in urban or high-risk areas may face higher premiums than those in rural, low-risk regions. This applies to general liability and property insurance costs. For instance, if you are in a flood zone, this insurance is an additional cost. Additionally, businesses with higher revenues will pay more for insurance as the loss exposure is greater than those companies with less revenue.

Payroll:

Businesses with higher payroll, especially for policies like workers' compensation or employment practices liability insurance, affect the premium paid. Some general liability policy premiums are based on payroll.

Type of Insurance Purchased:

Different types of insurance come with varying costs. For example, general liability insurance is often more affordable than cyber liability or professional liability insurance. The larger and more complex the business, the higher the premium will be for most coverages you require.

Policy Limits and Other Coverage Options:

Higher coverage limits and including optional coverage, such as umbrella or equipment breakdown insurance, increases the overall premium. Higher values in business-owned assets, higher liability limits, lower deductions, all of these have an effect on insurance costs.

Why Choose Insurance Advisor for Commercial Insurance in Texas?

Working with us will increase your insurance knowledge so you can make educated decisions on where your insurance dollars are best spent for your company. We will explain what different insurance types cover and what to consider for your operations. Our agents possess experience working with businesses and can provide quotes from multiple carriers, ensuring you find the best coverage at competitive rates.

Your business insurance can be accessed online, and this convenience means you can manage your insurance needs from the comfort of your home, office, or on the go, making it a hassle-free solution for Texas business owners.

FAQs for Texas Business Insurance