BUSINESS INSURANCE TEXAS: Costs, Best 2023 Options & All You Need

business insurance texas
Image source: Huckleberry Insurance

Most small business jobs in Texas are with companies that have less than 100 workers. Texas’ gross domestic output was $1.59 trillion in 2015, making it the world’s tenth-highest GDP if it were its own country. With these numbers growing significantly, it is important for every business owner in Texas to understand the insurance requirements and how to choose the right one for their business. This article tells you everything you need to know about business insurance in Texas, such as how much general liability insurance costs. 

Business Insurance Policies Available In Texas

#1. Business Owner’s Policy

A Business Owner’s Policy combines general liability and business property insurance into a single policy. Businesses in Texas can customize a BOP to match their specific needs by adding optional coverages such as data breach coverage and others. A Business Owner’s Policy should be considered if any of the following conditions exist:

  • Your company has a physical presence in Texas, whether it is an office, a storefront, or your house.
  • Your company is sued, for example, if a consumer slips on spilled goods within your store.
  • Inventory, furniture, and digital assets are examples of business assets that might be damaged or stolen.

#2. Business Income Insurance

Business Income insurance compensates Texas businesses for income lost when they are unable to operate due to a covered property loss, such as theft, fire, or lightning damage. This sort of insurance is intended to protect your company’s earnings from a number of dangers. Some Texas companies that should consider business income insurance include:

  • Retail enterprises that require online or physical places to display things for sale.
  • Businesses that rely on cloud storage providers to store their digital data.
  • Service-based enterprises that rely on a physical location to offer services, such as a hair salon.

#3. Professional Liability Insurance 

Texas professional liability insurance protects you and your business if you are found to be negligent in the services you provide. Many types of businesses require professional liability insurance, commonly known as errors and omissions insurance, or E&O insurance. Consider getting professional liability insurance if you operate directly with customers by providing services. Here are some firms that could benefit from professional liability insurance:

  • Professionals in Technology
  • Travel Consultant
  • Interior Designer
  • Consultants
  • Accountants

#4. Workers’ Compensation Insurance in Texas

Individual states and territories in the United States regulate workers’ compensation. Workers’ compensation insurance is not required by the state government for most private employers in Texas, although it can help employees who suffer work-related injuries or illnesses. Medical care, lost pay, and other benefits are available. Workers’ compensation insurance also provides financial assistance to the family of a deceased worker. Workers’ compensation can help your Texas business in the following situations:

  • A cook in a restaurant kitchen burns herself with hot grease, necessitating an emergency room visit and weeks of recovery.
  • A customer slips and falls on ice while heading into the office for a meeting, necessitating physical rehabilitation after an emergency room visit.
  • An employee is driving back to work after a lunch meeting when he is involved in an automobile accident that necessitates hospitalization.

Texas Business Insurance Requirements

State legislation might have an impact on the type of company insurance you require. These policies are mandated throughout Texas, from Houston to San Antonio.

#1. Insurance for workers’ compensation

Texas law differs from most others in that it does not normally require workers’ compensation insurance. However, most business owners should still get this coverage. Companies that do business with the government are required to have insurance.

Workers’ compensation pays for medical expenses and lost wages as a result of a work-related injury or illness. It also reduces the employer’s liability in the event of an injury on the job.

#2. Insurance for commercial vehicles

Commercial auto insurance is required in Texas for all business-owned automobiles. This policy covers the costs of work-related car accidents.

The following are Texas’ minimum requirements for motor liability insurance:

  • Bodily injury liability of $30,000 per person
  • Bodily harm liability of $60,000 per accident
  • Property damage liability of $25,000 per accident.

To comply with the rules, trucking businesses may require additional coverage.

Personal automobiles driven for work purposes should be protected by hired and non-owned auto insurance (HNOA), even if it is not required because personal auto plans typically exclude business use. It can be added to a commercial general liability or business owner’s policy (BOP).

How Much Does General Liability Insurance Cost In Texas?

A small firm in Texas should expect to pay between $300 and $5,000 per year for general liability insurance. 80% of small firms pay roughly $1,400 per year for this coverage, which protects them from the most prevalent litigation in small businesses.

These are only average rates. Make sure to search around with a few firms or a digital broker to compare multiple quotes to discover the best deal for your company.

What Factors Influence the Cost of General Liability Insurance?

There are numerous elements that influence how much you will pay for insurance. Among them are the following:

#1. Coverage amount

Higher levels of coverage are clearly more expensive, and you must pay more. Lower coverage equals lower premiums. Lower coverage may not be enough to pay all expenditures if you are sued, so make sure to get the appropriate coverage limit for the insurance. Small firms often have $1M/$2M in general liability insurance coverage.

#2. Deductibles

The bigger the deductibles on the coverage, the lower the rates. However, you must exercise caution when determining the appropriate deductible amount that your company can afford when necessary.

#3. Business Type

Insurance costs more in higher-risk sectors. If you work as a contractor, for example, there is a high risk that clients, customers, or bystanders would trip over something and damage themselves. The risk is substantially reduced if you work as a locksmith. In general, building, contracting, and trucking industries pay the highest for general liability insurance, while accounting and IT services pay the least.

#4. The number of years you have worked in the industry

The more experience you have in your current sector, the less likely it is that you will face litigation because you have acquired enough experience to do the correct things and follow the right process to prevent lawsuits.

#5. How long you have been in business 

The longer you’ve been in business, the less likely you’ll have litigation because you’ve learned how to manage your firm properly and have created proper safety standards to avoid accidents and lawsuits.

#6. The size of your company 

The most typical use of general liability insurance is to guard against slip-and-fall incidents caused by your customers. The more clients there are, the more likely it is that one of them may damage themselves. The more storefronts your company has, the more probable an accident may occur.

#7. Location

If you’re reading this, you’re in Texas, however certain cities have higher rates than more suburban or rural areas. Business premises in densely populated areas are smaller and more congested with customers, increasing the likelihood of an accident.

#8. History of claims

If you’ve had previous claims, your premiums will be higher. Your rate will be cheaper if you have a clean record with no claims.

How Much General Liability Coverage do I Require?

The basic coverage of $1 million per incident and $2 million aggregate would be adequate for most small firms.

Higher limits may be preferable if your firm is really large or particularly risky, such as construction. If your company is in a low-risk industry, such as IT or accounting consulting, you may wish to get less coverage to save money.

In Conclusion,

To protect against a number of work-related events, Texas business owners should consider numerous types of business insurance. Injury, illness, and property damage are just a few of the many factors that could jeopardize your company’s financial health.

The Bureau of Labor Statistics says that there were 214,000 non-fatal workplace injuries in Texas in 2018. About 83% of those injuries happened in private-sector businesses. Workers’ compensation and other types of business insurance are not required in Texas, but small business owners should still think about getting them to protect their income.

Frequently Asked Questions

Does Texas require business insurance?

Commercial General Liability insurance is not required in Texas, but it protects business owners from liability claims for bodily injury, property damage, and personal and advertising injury (slander).

What does commercial general liability cover?

A Commercial General Liability (CGL) policy protects your company against financial loss if your services, business activities, or personnel cause property damage or personal and advertising hurt. It includes non-professional negligence.

What is not covered under commercial general liability insurance?

A general liability insurance coverage will not cover commercial auto accidents caused by you or your workers while driving for work. A commercial auto insurance policy might help you pay for losses.

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