When starting or running a business in Texas, understanding the insurance requirements is crucial for compliance and protection. While Texas does not mandate all types of business insurance, some coverage is legally required, depending on the nature of your operations. Here's a breakdown of what you need to know.
Workers' Compensation Insurance
Unlike most states, Texas does not require private employers to carry workers' compensation insurance. However, there are exceptions. If your business has a contract with a government entity, you are required to provide workers' compensation coverage for your employees.
Although it's not required, providing workers' compensation can protect your company from expensive lawsuits should an injury arise at work. You can be liable for medical bills, missed income, and other losses without it.
Commercial Auto Insurance
Commercial auto insurance is needed in Texas whether or not your company owns or runs vehicles. The policy has to satisfy the minimal liability criteria set by the state, which consist of:
- $30,000 for bodily injury per person.
- $60,000 for bodily injury per accident.
- $25,000 for property damage per accident.
Should an employee be in an accident while operating a work car, this coverage guards your firm from liability. If employees use personal vehicles for business purposes, non-owned auto liability coverage is recommended but not required.
Professional Liability Insurance for Certain Professions
Some industries in Texas are required to carry professional liability insurance, which is also called errors and omissions insurance. For instance:
- Licensed professionals like doctors, lawyers, and real estate agents may need coverage to meet state licensing requirements.
- Contractors may need proof of liability insurance to secure certain contracts.
Unemployment Insurance
Texas businesses with employees must register with the Texas Workforce Commission and pay unemployment insurance taxes. While this is not a traditional insurance policy, it is a legal obligation to provide financial support to workers who lose their jobs through no fault of their own.
Why Compliance Matters
Ignoring legally mandated insurance can result in fines, legal penalties, and contract loss. Having enough insurance shields your company, staff, and assets from unanticipated hazards going beyond legal compliance.
Knowing and fulfilling the Texas insurance requirements can help you run your company with peace of mind and confidence.