Running a successful contracting business in Texas comes with plenty of moving parts — projects, payroll, vehicles, subs, and clients who expect everything done right. But one mistake many growing contractors make is not updating their insurance coverage as their business expands.
At Eastman Insurance Solutions, we often see firms crossing the $5M+ annual revenue mark still carrying coverage limits designed for much smaller operations. The result? Hidden exposures that could derail years of hard work if a major claim hits.
So, how much insurance does your contracting business actually need? Let’s break it down.
Understanding Texas Contractor Coverage Requirements
In Texas, there’s no one-size-fits-all rulebook for contractors — but both state laws and client contracts shape your insurance obligations.
- General Liability: Most commercial clients require at least $1M per occurrence / $2M aggregate, though larger GCs and municipalities may demand higher.
- Workers’ Compensation: While Texas doesn’t mandate it for all businesses, clients and general contractors often require proof of coverage before you can step on-site.
- Commercial Auto: State minimums are low ($30K/$60K/$25K), but they’re rarely adequate for a contracting fleet. Most firms carry $1M combined single limit.
- Umbrella / Excess: More job sites now require an additional $2M–$5M umbrella — especially when heavy equipment or subcontractors are involved.
Pro Tip: Always check contract language for “Additional Insured,” “Primary & Non-Contributory,” and “Waiver of Subrogation” clauses — missing these could void your compliance.
Key Policies Every Texas Contractor Should Carry
Every solid risk management program for a mid-market contractor should include:
General Liability Insurance
Protects against property damage, injury claims, and completed operations exposures — essential for every trade.
Workers’ Compensation
Covers your employees’ medical expenses and wage replacement for job-related injuries. Even if not required by law, it protects both your people and your balance sheet.
Commercial Auto Insurance
Covers company trucks, trailers, and any vehicle used for work. Review your hired/non-owned coverage if employees drive personal vehicles for business.
Builders Risk or Installation Floater
Protects materials and work in progress — from theft to storm damage — on projects under construction.
Umbrella / Excess Liability
Adds extra protection above your primary policies. For a $5M+ contractor, this is non-negotiable.
Inland Marine
Covers tools, equipment, and mobile machinery that move between job sites — often overlooked but critical for trades.
Determining the Right Coverage Limits
How much insurance you need depends on project size, payroll, subcontractor use, and the types of work you perform.
Here’s a quick benchmark for mid-size Texas contractors:
| Policy Type | Typical Minimum | Recommended for $5M+ Firms |
|---|---|---|
| General Liability | $1M / $2M | $2M / $4M or higher |
| Workers Comp | Statutory | Statutory + Employer Liability up to $1M |
| Auto Liability | $1M CSL | $1M–$2M CSL |
| Umbrella / Excess | $2M | $5M–$10M |
| Builders Risk | Project Value | Full contract value + soft costs |
Remember: Your insurance program should grow with your revenue, payroll, and assets. If you added trucks, equipment, or new trades in the last 12 months — it’s time to review your limits.
Advanced Risk Strategies for Growth-Focused Contractors
For larger firms ready to take control of their insurance destiny, consider these next-level approaches:
- Group Captive Insurance Programs: Shared-risk models that reward companies with strong safety records by returning unused premium.
- Safety & EMR Management: A low Experience Mod (under 1.0) directly impacts workers’ comp and helps win bids.
- Contractor Risk Transfer Programs: Vet subcontractor COIs, ensure coverage matches your standards, and track compliance inside your AMS.
Eastman Insurance Solutions partners with Texas contractors to build long-term, scalable risk programs — not just policy renewals.
When to Reassess Your Coverage
You should review your coverage anytime you:
- Win a major new project or contract
- Add new vehicles, properties, or employees
- Expand into new trades or higher-risk work
- Cross a new revenue milestone (e.g., $5M → $10M)
- Haven’t done a policy review in over 12 months
Your insurance should evolve as your business grows — not lag behind it.
Schedule your free Contractor Coverage Review today at EIS-Texas.com
Quick Coverage Checklist for $5M+ Contractors
General Liability (at least $2M / $4M)
Workers’ Comp (Statutory + $1M Employers Liability)
Auto ($1M CSL minimum)
Umbrella ($5M+)
Builders Risk or Installation Floater
Inland Marine (tools & equipment)
Pollution & Cyber (as exposures grow)
FAQ Section
Q1: What’s the minimum insurance a Texas contractor needs?
At minimum, general liability and auto insurance are essential. However, contracts often require additional coverage such as workers comp and umbrella limits.
Q2: How often should contractors review insurance limits?
At least once per year — ideally 60–90 days before renewal — or anytime you add new assets, trades, or contracts.
Q3: What’s the difference between umbrella and excess liability?
Umbrella policies can extend limits over multiple policies; excess applies to one policy only. Contractors benefit most from umbrella structures for flexibility.
Q4: How can I lower costs without cutting coverage?
Invest in safety programs, telematics, and EMR management. They reduce claims frequency and improve your pricing leverage with carriers.
Lets Get Started
Ready to make sure your Texas contracting business is fully protected?
Contact Eastman Insurance Solutions – Texas today to schedule a Contractor Risk Management Review and discover how our Group Captive Programs and Risk Management Services can help you build a safer, more profitable future.
Visit www.EIS-Texas.com
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