Contractor Insurance Checklist in Texas

A subcontract sets the four policies to carry

A Texas contractor’s insurance checklist is four policies and four documents. The policies are general liability, tools and equipment coverage written as inland marine, commercial auto once the title names the company, and workers compensation, which Texas Labor Code §406.002 makes elective for most private employers.

The documents are what a general contractor asks for before a crew reaches the site: a certificate of insurance, an additional insured endorsement, a waiver of subrogation, and primary and non-contributory wording.

A commercial umbrella sits above the first three policies when a subcontract asks for higher limits than the primary policies carry. The subcontract decides the checklist, so the clause is read before the signature.

The policies on a Texas contractor’s checklist

A Texas trade contractor usually carries four policies, and each one answers a loss the others refuse.

What each policy answers:

• General liability: injury to someone outside the crew, and damage to property the business does not own
• Inland marine: small tools, larger equipment, and materials in transit or stored at a job site
• Commercial auto: the truck or the van, especially once the title names the company
• Workers compensation: an employee hurt on the job, elective for most private Texas employers under Texas Labor Code §406.002

Faulty work is the exclusion that catches Texas contractors. General liability pays for the water damage from a bad installation, and it does not pay to redo the installation. Contractor Insurance in Texas sets out all four policies.

The evidence a general contractor asks for

A general contractor asks a subcontractor for four documents rather than one, and only the first is the certificate.

What gets requested:

• A certificate of insurance, which Texas Insurance Code §1811.051 bars from altering or extending the policy it names
• An additional insured endorsement, extending the policy to the general contractor, which does change coverage
• A waiver of subrogation, giving up the insurer’s right to recover from the general contractor after it pays
• Primary and non-contributory wording, putting the subcontractor’s policy ahead of the general contractor’s

Three of those four are insurer decisions. Certificates of Insurance in Texas sets out what the certificate itself can and cannot do, and Texas Insurance Code §1811.101 requires the form to be filed and approved.

The contract questions to settle before signing

A subcontract decides the insurance a Texas contractor has to carry, so the insurance clause is read before the signature rather than after a certificate is rejected.

What to check in the clause:

• The per-occurrence limit, which caps one claim, and the general aggregate, which caps the policy year
• Whether an umbrella layer is needed to reach the limits the clause names
• Whether additional insured status is required for ongoing operations, completed operations, or both
• Whether a waiver of subrogation is required on general liability, commercial auto and workers compensation
• Whether the certificate has to name the project, and in which box
• The certificate holder’s legal name, spelled as the contract spells it

Texas sets no general liability limit for most private businesses, so a subcontract’s number is a private requirement rather than a legal one.

The documents a Texas submission needs

A contractor’s submission moves in one pass when the paperwork is assembled before the call.

What to have ready:

• The subcontract, or the insurance clause, in full
• Annual receipts, payroll by trade, and any cost paid to subcontractors
• A list of vehicles with their 17-digit VINs, and the drivers with their license numbers
• A schedule of tools and equipment, with the per-item values
• Loss history for the past three years, and the expiring declarations pages
• The entity name exactly as the title and the contract spell it

Commercial Auto Insurance in Texas sets out the vehicle side, which is the part most often missing at a first call.

The Texas license requirements that carry insurance

A Texas trade license can require insurance on its own, separately from anything a customer asks for.

Where the license sets the requirement:

• Texas Occupations Code §1305.159 makes an electrical contractor prove financial responsibility
• Texas Occupations Code §1302.102 leaves the insurance on an air conditioning and refrigeration license to Texas Department of Licensing and Regulation rule
• Texas Labor Code §406.096 makes a governmental entity entering a building or construction contract require the contractor to certify workers compensation coverage for every employee on the public project, with each subcontractor doing the same

A contractor on a Texas public job therefore carries workers compensation whatever Texas Labor Code §406.002 would otherwise allow. General Liability Insurance in Texas sets out the liability limits a license or a contract names.

Where Aulona Insurance Group is not the right fit

Aulona Insurance Group has no market for roofing or siding contractors on its package lines, which are a business owners policy, general liability, commercial property and professional liability. Roofing and siding is a no-market problem rather than a pricing one.

Other classes with no market on those lines:

• Night clubs, gas stations, towing operators and auto dealerships
• Hospitals and physician practices
• Marijuana and cannabis businesses
• Used-goods dealers and non-durable goods wholesalers
• Livestock operations and pet breeders

Commercial auto sits outside those package lines, and a commercial auto question for any trade is answered on the recorded call with Luka Cenaj. Texas Business Insurance lists the lines the agency places. Life, health, Medicare and disability coverage are not written at all.