Texas contractors grow quickly. From small residential jobs to multi-million-dollar commercial projects across Dallas–Fort Worth, Rockwall, Collin County, and East Dallas, subcontractor exposure expands just as fast—and often faster.
Yet most contractors still depend on a single sheet of paper that provides no actual protection:
The Certificate of Insurance (COI).
Here’s the truth few agencies tell their clients:
A certificate is not coverage. A certificate is not a contract. A certificate is not protection.
In Texas, especially under the pressure of tight general contractor agreements, municipal projects, TXDOT contracts, and aggressive plaintiff attorneys, your COI will fail you long before you realize it.
This article explains exactly why, and what real risk transfer looks like for growing construction firms across North Texas.
Industry Overview: Why COIs Fail Contractors in Texas
Texas contractors operate in one of the most dynamic construction environments in the country:
- Multi-city work across DFW
- Large subcontractor networks
- Increasing bid competition
- Tightening contract language
- Higher liability severity
- Rapid project turnaround expectations
This complexity exposes a major flaw:
Most subcontractors present certificates that appear compliant, but their policies are not.
Texas general contractors lose hundreds of thousands each year because risk transfer was never properly executed—even though they collected COIs.
But why does this happen so consistently? The answer begins with a fundamental misconception.
COIs Do Not Provide Coverage — Under Any Circumstances
A Certificate of Insurance:
- Does not amend a policy
- Does not provide Additional Insured status
- Cannot grant contractual rights
- Is not legally binding
- Does not guarantee ongoing coverage
- Does not override exclusions
- Does not confirm completed operations coverage
- Is inadmissible as proof of coverage in most Texas courts
It is informational only, and it is not enforceable.
There is not a contractor in Texas who hasn’t collected hundreds of COIs—yet almost none have verified the endorsements that matter.
A COI is simply a receipt.
The endorsements behind the COI are the policy.
This is where Texas contractors get blindsided.
The Texas COI Trap: How Contractors Get Burned Even When the COI Was “Valid”
Here’s a real composite example drawn from actual Texas claims:
A general contractor in Frisco hires a concrete subcontractor. The subcontractor provides a COI showing:
- $1M Liability
- Additional Insured
- Waiver of Subrogation
Looks perfect. Everyone signs off.
Two months later, the concrete subcontractor damages a neighboring structure while pouring a foundation. The GC submits the claim to the subcontractor’s carrier.
The carrier denies it.
Why?
Because the subcontractor’s endorsement required:
- A written contract signed before work began
- A project-specific Additional Insured endorsement, not a blanket one
- Completed Operations coverage
- A Primary & Noncontributory provision
- Compliance with a 48-hour incident reporting clause
The COI said “Additional Insured.”
The policy said “Additional Insured only under specific conditions.”
The GC paid:
- $290,000 in damage
- $81,000 in legal fees
- $28,000 in administrative costs during the dispute
This is the COI trap.
Texas contractors lose because they collected certificates—not risk transfer.
Understanding the Risk Transfer Equation (The EIS Texas Framework)
Risk transfer is not paperwork.
Risk transfer is a legal system designed to shift liability away from the general contractor.
Here are the pieces that matter:
1. Contractual Risk Transfer
Your subcontractor agreement must include:
- Broad form or intermediate form indemnity
- Hold harmless provisions
- Defense language
- Insurance requirement matching project needs
- Texas-compliant indemnity language
Texas anti-indemnity laws limit certain indemnity types.
Most local agencies don’t understand these statutes and create agreements that sound strong but are unenforceable.
2. Additional Insured Endorsements (AI)
A Texas contractor needs BOTH:
- Ongoing Operations AI
- Completed Operations AI
Missing either one creates major exposure for post-completion claims.
3. Primary & Noncontributory Endorsement
This forces the subcontractor’s policy to respond first—protecting your own limits.
Most COIs list this, but most subcontractor policies do not include it.
4. Waiver of Subrogation
Prevents the carrier from suing the GC after paying the subcontractor’s portion of a loss.
Texas claims frequently escalate because subcontractors lack this endorsement.
5. Completed Operations
This is where most claims occur—months or years after project completion.
Without Completed Operations AI:
- Water intrusion
- Foundation cracks
- Stucco failure
- Roofing defects
- Concrete spalling
- Improper fastening
all come back to haul you into litigation.
6. Policy Exclusions
Even with endorsements, exclusions can gut coverage:
- Residential construction exclusions
- Subcontracted work exclusions
- EIFS exclusions
- Earth movement exclusions
- Independent contractors exclusions
- Damage to your work
- Damage to impaired property
Local Texas agencies often fail to detect these exclusions entirely.
The Texas Contractor Growth Problem: More Jobs, More Subs, More Risk
As Texas contractors grow from:
- $2M → $5M → $10M → $20M → $50M in revenue
their risk profile evolves into something far more complex.
Key triggers include:
1. Multi-subcontractor projects
Different trades → different exposures → different indemnity structures.
2. Multi-city operations
Jobs in Rockwall differ from Dallas, Frisco, or Arlington.
3. Hard deadlines
Compliance failures create project delays.
4. Higher contract limits
Large developers require tight provisions.
5. Bigger fleet (more exposure)
Subs are not the only risk—your subcontractors’ drivers become part of your exposure chain.
6. Safety expectations increase
Your ability to win bids requires risk documentation.
Risk transfer becomes foundational—not optional.
Deep Dive: Why GC Liability Explodes Without Risk Transfer
Here’s a breakdown of incident types where Texas contractors get blindsided:
1. Subcontractor Employee Injury (Third-Party Over-Action)
A subcontractor’s employee gets hurt.
They sue the general contractor.
Without additional insured + proper indemnity language:
Your GL responds, not theirs.
2. Property Damage to Adjacent Structures
Example: A roofer causes water intrusion into a neighboring tenant space in Fort Worth.
If the subcontractor’s policy excludes that work?
You pay.
3. Completed Operations Failure
The majority of construction claims occur after completion.
Without completed ops AI:
You inherit the sub’s failure.
4. Faulty Workmanship Triggering Economic Loss
GL excludes faulty workmanship.
Risk transfer forces the subcontractor to absorb disputes.
Without risk transfer?
Your business eats performance losses.
5. Subcontractor Insolvency
If their coverage lapses mid-project, a COI won’t save you.
Real EIS Texas example:
A subcontractor cancelled their policy after issuing a COI.
The GC was never notified.
A claim occurred.
Their insurer denied it.
This is why EIS Texas provides active certificate tracking systems for contractors across DFW.
Certificates & Compliance Tools
Texas Case Law That Reinforces COIs Are Not Coverage
Two Texas cases highlight the legal truth:
1. TIG Insurance Co. v. Sedgwick
Ruling:
A certificate cannot modify coverage, extend terms, or override exclusions.
2. Brown & Brown v. Omni Metals
Ruling:
A COI is informational and cannot create a contractual obligation for the insurer.
Texas courts are consistent:
If it’s not in the policy, it does not exist.
EIS Texas: The Risk Transfer Partner for Growing Contractors
EIS Texas provides a structured, contractor-specific program for real risk transfer—not just COIs.
Our services include:
1. Subcontractor Agreement Review
We review your subcontractor agreements to confirm that indemnity, hold-harmless, and insurance requirements are written clearly, match Texas law, and align with your actual operations. The goal is to make sure your contracts are enforceable before a claim ever occurs.
2. AI, Waiver, and Primary & Noncontributory Endorsement Verification
We do not stop at the certificate. We verify that your subcontractors’ policies truly include Additional Insured status, Waiver of Subrogation, and Primary & Noncontributory wording where required. That means reading the endorsements, not just trusting what appears on a COI.
3. Certificates of Insurance Tracking
Instead of leaving COIs buried in email threads or file folders, we help you implement a system to track expiration dates, limits, and compliance status—especially important for contractors working on multiple projects across North Texas.
4. Completed Operations Coverage Confirmation
We confirm that your subcontractors carry Completed Operations coverage that extends beyond project completion and that your Additional Insured status is properly extended into that period. This is critical for Texas contractors, since many defects and claims arise months or years after the work is finished.
5. Vendor Risk Audits for Multi-City Contractors
For contractors working across multiple Texas markets—Dallas, Fort Worth, Rockwall, Frisco, Austin, and beyond—we help you evaluate vendor and subcontractor risk by trade, geography, and claim history. This gives you a clearer picture of which partners strengthen your risk profile and which ones increase your exposure.
6. Project-Specific Risk Transfer Plans
Instead of a one-size-fits-all approach, we help you design risk transfer plans tailored to your largest or most complex projects. That may include higher limits, specialty endorsements, specific subcontractor requirements, and documentation standards tied to a particular job or owner contract.
We Invite You To Try Something, Different.
Texas contractors deserve more than paper protection.
You deserve real risk transfer—coverage that reflects the scale of your projects, the subcontractors you rely on, and the communities you build across Dallas–Fort Worth and greater Texas.
At EIS Texas, we help contractors eliminate blind spots, secure stronger contractual protection, and build an insurance program worthy of a growing operation.
FAQs
Are Certificates of Insurance legally binding in Texas?
No. A COI is informational only. It does not provide coverage or enforce contract terms.
Why doesn’t a COI guarantee Additional Insured status?
AI status is granted by endorsement—not by a certificate. Without the endorsement, the COI is irrelevant.
How can Texas contractors protect themselves from subcontractor mistakes?
Through risk transfer: contracts, endorsements, indemnity, and active compliance tracking.
Do small subcontractors cause large claims?
Yes. Many claims that exceed $250k originate from subcontractors with inadequate coverage or improper endorsements.
What is the most important part of risk transfer?
Additional Insured + Primary & Noncontributory + Waiver of Subrogation + verified contracts.
What industries need risk transfer the most?
General contractors, concrete, roofing, excavation, asphalt, mechanical, electrical, and other specialty trades.
Looking for more insurance tips?
- What Are Some Trusted Local Insurance Agents in Dallas That Serve Roofers?
- Texas Contractor Insurance Compliance Failures – The “Why” behind the Breakdown.
- Sell Your Texas Insurance Agency to Owners, Not Private Equity
- The Asphalt Coverage Texas Contractors Miss
- Why Texas Residential Care Facilities Are Looking To Group Captives
Texas contractor insurance checklist, commercial contractor insurance Texas, how much insurance do Texas contractors need, contractor insurance coverage Texas, construction business insurance Texas, general liability insurance for contractors Texas, workers compensation insurance Texas contractors, business auto insurance for contractors, builders risk insurance Texas, contractor umbrella policy Texas, group captive insurance Texas contractors, subcontractor insurance compliance checklist, contractor risk management Texas, insurance limits for contractors Texas, construction insurance requirements Texas, contractor liability coverage Texas, contractor insurance guide Texas, best insurance for Texas contractors, Texas trade contractor insurance, mid-size contractor insurance Texas, EMR and workers comp cost reduction Texas, insurance for construction companies Texas, commercial insurance checklist Texas contractors, total cost of risk for contractors, risk management strategies for trade contractors, Texas contractor compliance checklist, insurance for multi-crew trade contractors, contractor coverage limits explained, commercial contractor protection Texas, insurance programs for construction businesses, Eastman Insurance Solutions Texas contractors, protect what matters most Texas contractors