Texas Contractor Insurance Requirements: What’s Actually Required

Short answer: Texas is unusual — workers’ compensation is not required for most private employers, including contractors. But opting out is not free. If you carry no coverage you become a “non-subscriber,” and Texas makes you file DWC Form-005 with the Division of Workers’ Compensation, post notices at the workplace, tell new hires in writing, report injuries, and give up the liability limit that a policy provides. Texas also has no statewide general contractor license, so no state agency ties a liability insurance figure to one.

Most articles about contractor insurance are really about a state licensing board with a dollar figure attached. Texas does not work that way, and the mistake that follows is assuming “not required” means “nothing to do.” The IRS handles your federal tax; the Texas Comptroller of Public Accounts is the state revenue authority — Texas has no personal state income tax, so there is no state income return, though many entities owe a franchise tax report; and the Texas Department of Insurance governs the workers’ compensation question below. Licensing is covered in Texas contractor license requirements, and sales tax on construction services behaves differently here than in most states — see Texas sales tax for contractors.

Does Texas require contractors to carry insurance?

Not at the state level for general contracting, because there is nothing at the state level for general contracting to attach to. Texas licenses trades, not general contractors:

Work	Licensing body
Electrical, electrical sign, residential appliance installation	Texas Department of Licensing and Regulation (TDLR)
Air conditioning and refrigeration	TDLR
Plumbing	Texas State Board of Plumbing Examiners (TSBPE)
General contracting, remodeling, home building	No statewide license — check your city

Insurance obligations therefore reach you through three doors: your trade license, if you hold one; the workers’ compensation rules; and your contracts.

Is workers’ compensation mandatory for a Texas contractor?

No, in most cases. The Texas Department of Insurance states that private employers in Texas can choose to carry workers’ compensation coverage, but it is not required in most cases. That qualifier is doing real work: work performed for a governmental entity commonly carries its own coverage requirement, and many private contracts impose one. Read the contract’s insurance article before you bid rather than assuming the general rule applies.

What a policy buys you, in TDI’s own framing, is a limit on your liability if an injured employee sues your business — with an exception for gross negligence resulting in death. That is the trade you make when you skip it.

What does a Texas non-subscriber have to file?

This is the part that gets skipped, and it is where the actual Texas-specific obligations live. If you employ people and choose not to carry coverage, you are a non-subscriber, and the Division of Workers’ Compensation requires you to say so on a schedule:

Obligation	Timing
File DWC Form-005, the notice of no coverage, with DWC	After hiring your first employee — TDI names the trigger without publishing a day count, so do not sit on it
File DWC Form-005 again, annually	Between February 1 and April 30 each year
Post a notice of no coverage in the workplace	Ongoing — in English, Spanish, and other languages as needed
Tell new employees in writing that they are not covered	At hire
Report injuries, illnesses and deaths on DWC Form-007	See below

On injury reporting, TDI applies the duty to non-subscribers with five or more employees: report work injuries causing more than one day of lost time, plus all work-related illnesses and deaths, using DWC Form-007 — titled the employer’s report of a noncovered employee’s work-related injury or illness. TDI states the deadline as one month and seven days from the death, from the date you knew of the work-related illness, or from when the lost time began.

Note the annual repeat. The February 1 to April 30 window is not a one-time registration — a non-subscriber files every year they remain one. Filing once when you hired your first helper and never again leaves you out of compliance.

Am I exempt if I am a sole proprietor with no employees?

The question dissolves rather than gets answered. Workers’ compensation covers employees; a one-person operation has nobody to cover, so there is no filing to make and no notice to post. The non-subscriber obligations above are triggered by employing people, not by trading.

What does not dissolve is your own exposure. Because Texas does not make coverage compulsory, it builds no state-run safety net for your own injuries. If you fall off a roof working alone here, workers’ compensation is not what pays you; personal disability or accident cover bought on the private market is. That is a purchasing decision, not a compliance one — worth making deliberately rather than by default.

The moment you put one person on the payroll, even a day laborer, you are an employer, and the Form-005 obligation attaches if you are not buying a policy.

Which Texas licenses do carry an insurance requirement?

The trade licenses do, and here the numbers are concrete:

License	Insurance requirement
Electrical contractor (TDLR)	Minimum $300,000 per occurrence combined bodily injury and property damage; minimum $600,000 aggregate; minimum $300,000 aggregate for products and completed operations
Responsible Master Plumber (TSBPE)	Minimum $300,000 commercial liability insurance
Air conditioning and refrigeration contractor (TDLR)	TDLR attaches its own insurance requirement to this license — confirm the current amounts with TDLR before applying

Two things follow. If you are an electrician or a plumber in Texas, general liability insurance genuinely is a license condition, and lapsing it is a licensing problem rather than merely an uninsured-risk problem. And if you are a general remodeler subcontracting those trades out, none of these figures apply to you personally — they apply to the licensed subcontractor, which is one more reason to collect their certificate.

Do Texas contractors need a bond or home warranty insurance?

There is no statewide contractor license bond, because there is no statewide contractor license to bond. Bonding requirements here come from the city or county you register with, the terms of a public project, or private contracts where an owner or general contractor requires one.

Home warranty insurance is the same story. No Texas state agency licenses residential builders, and none requires you to place a warranty policy on a customer’s home. Any warranty on your work comes from the contract you sign — the terms are yours to write, and yours to be held to.

Why does the general contractor still ask for a certificate of insurance?

Because commercial reality is stricter than Texas law. A general contractor, property manager or commercial client will require a certificate naming them as additional insured, plus proof of workers’ compensation or a signed waiver, before you set foot on site. None of that is state-mandated; all of it is enforceable, because it is a contract term.

The practical effect is that you end up carrying coverage the state never required, on someone else’s schedule, with renewal dates you have to track. If getting paid is the friction point, how to get clients to pay covers the paperwork that unblocks an invoice.

What records does all of this create?

An unusual pile: annual DWC Form-005 confirmations if you are a non-subscriber, certificates of insurance issued to clients, certificates collected from every sub, trade license renewals, and the federal side — 1099 income, expenses, mileage. Set-aside planning is its own exercise, covered in how much to set aside for 1099 taxes.

Keel: Invoice Maker & Receipts, by Ilura Technology OÜ, handles the income-and-expense half of that pile. It runs entirely on your iPhone: no account, no sign-in, no bank connection, no cloud sync. Its App Store privacy label reads “Data Not Collected.”

Say the limits out loud. Keel is a record keeper, not a compliance tool. It does not file DWC Form-005, sell or arrange insurance, or renew a TDLR or TSBPE license. What it does is produce numbered PDF invoices with your logo and a payment-link QR code, read receipts on device using Apple Intelligence, log mileage, and hold the result in an append-only, hash-chained ledger the Accountant Pack exports as a single file for the year.

The free tier gives unlimited invoices, receipts and mileage. Keel Pro is a one-time $249.99 Lifetime purchase, not a subscription. Keel: Invoice Maker & Receipts on the App Store.

Frequently asked questions

Is workers’ compensation required for contractors in Texas? Not for most private employers. The Texas Department of Insurance states that private employers can choose to carry coverage but it is not required in most cases. The qualifier matters: work for a governmental entity and many private contracts impose coverage requirements of their own, so read the contract first.

What is a non-subscriber in Texas? An employer that chooses not to carry workers’ compensation. Non-subscribers must notify DWC and their employees, file DWC Form-005 after hiring a first employee and again annually between February 1 and April 30, post a notice of no coverage at the workplace in English, Spanish and any other language needed, and report qualifying injuries, illnesses and deaths.

Does a Texas sole proprietor with no employees need workers’ comp? No — there are no employees to cover, so neither the policy nor the non-subscriber filings apply. Your own injuries are a different matter: Texas provides no compulsory scheme covering you, so income protection while you are off the tools comes from private disability or accident cover you buy yourself.

Do I need general liability insurance to work as a contractor in Texas? Not as a state licensing condition for general contracting, because Texas issues no statewide general contractor license. It is a licensing condition for specific trades: TDLR requires electrical contractors to carry at least $300,000 per occurrence, $600,000 aggregate, and $300,000 products and completed operations, and TSBPE requires a Responsible Master Plumber to hold at least $300,000 in commercial liability coverage.

Is a bond required for Texas contractors? There is no statewide contractor license bond in Texas. Bonding shows up through city or county registration, public project requirements, and private contract terms instead. Because it is local rather than statewide, the answer genuinely differs between Texas cities — check with the jurisdiction where the work is.

Does Texas require home warranty insurance on new homes? No state agency licenses residential builders in Texas or requires a warranty policy to be placed on a customer’s home. Warranty obligations here come from the contract you sign with the homeowner. That cuts both ways: nothing is imposed on you, and nothing protects you from terms you agreed to without reading.

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This article is general information, not legal or tax advice. Rules change — confirm with the authority named above.