Starting or running a small business in Texas? Here's exactly what insurance you need, what it costs, and how to get the best coverage.
What Insurance Does a Small Business Need in Texas?
Most Texas small businesses need at minimum general liability insurance, and many need additional coverages. The most common business insurance package is a Business Owner's Policy (BOP), which bundles general liability and commercial property at a discounted rate. If you have employees, workers' compensation insurance is strongly recommended. If you use vehicles for business, commercial auto insurance is required. Professional service businesses need professional liability (E&O).
Business Owner's Policy (BOP) for Texas Small Businesses
A BOP combines general liability, commercial property, and business interruption insurance at a discounted rate. It's available for most low-to-medium risk businesses with under $5–10 million in revenue. For a small Texas retail store or office-based business, a BOP might cost $800–$2,500/year. For restaurants, contractors, or higher-risk businesses, expect $2,500–$10,000+.
Texas Workers Compensation for Small Businesses
Texas is the only state where workers' comp is not required for most private employers, but the risks of going without it are significant. A single workplace injury lawsuit in Texas can easily exceed $500,000. For very small businesses (1–5 employees), alternatives like occupational accident insurance exist but provide less protection. If you work in construction, workers' comp is practically mandatory — most GCs and project owners require it from subcontractors.
Commercial Auto Insurance for Texas Businesses
If you or your employees use vehicles for business purposes, you need commercial auto insurance. Personal auto policies exclude business use, which means a claim from a business-related accident could be denied. Texas requires the same minimum liability limits for commercial vehicles (30/60/25), but most businesses carry much higher limits.
Cyber Insurance for Texas Small Businesses
Cyber liability insurance is one of the fastest-growing and most underutilized business insurance products. A data breach or ransomware attack can cost a small business $50,000–$500,000+ in recovery costs. Cyber insurance covers breach investigation, notification costs, ransomware payment, business interruption, and regulatory fines. Premiums start around $500–$1,500/year for basic coverage.
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