Reviewed and approved by Samuel Corso, licensed Texas insurance agent.

Published September 7, 2026 · Updated October 1, 2026

What insurance does a small business need in Texas?

Small business insurance in Texas can mean several separate coverages, and this guide walks through how the Texas Department of Insurance (TDI) describes each one, including what TDI says the general liability and property coverages may leave out.

The short version. TDI describes several coverages a small business in Texas may consider. Its Commercial general liability insurance page describes liability coverage for claims of bodily injury, property damage, and personal and advertising injury, and its Commercial property insurance guide describes coverage for a building and business property damaged by an event covered by the policy, noting that coverage and rates vary by company.

Here's what we'll cover: general liability and the exclusions TDI gives as examples, how TDI separates liability from workers' compensation, occurrence and claims-made policies, the three levels of commercial property coverage, flood and coastal wind, the other coverages TDI lists, business owner's policies and premium audits, and why this page gives no price.

General liability: what it covers

Commercial general liability (CGL) insurance is the liability coverage for businesses that TDI describes on its CGL page. TDI defines it this way: "Commercial General Liability (CGL) insurance protects business owners against claims of liability for bodily injury, property damage, and personal and advertising injury (slander and false advertising)."

This is coverage for claims that other people make against the business.

The same page describes two parts of the coverage: premises/operations coverage, which pays for bodily injury or property damage that happens on the business premises or results from business operations, and products/completed operations coverage, which pays for bodily injury and property damage that happens away from the premises and is caused by the business's products or completed work.

The property damage in TDI's definition is about liability claims against the business. Damage to the business's own building and property is the subject of a separate TDI publication, the commercial property guide, covered further down this page. The CGL page also notes that coverage varies by insurer, so your own policy wording is what counts.

Exclusions TDI gives as examples: your work and your product

A commercial general liability policy in Texas comes with exclusions, and TDI's CGL page gives examples of exclusions it says are commonly contained in a CGL policy. On that page TDI adds that coverage varies by insurer, that a policy will include additional exclusions beyond its examples, and that you should carefully review your policy and any endorsements.

Your work. Generally, according to the CGL page, CGL policies exclude coverage for property damage to your work, with an exception if a subcontractor working for you caused the damage. The page's example is a homebuilder whose garage roof collapses because of faulty construction and damages the homeowner's vehicle. There, the policy may provide coverage for the repair or replacement of the vehicle but may not pay to repair the collapsed roof, because the roof is the builder's work. In its second example, where subcontractors built the roof, the policy may cover the damage to the vehicle and also may pay to repair or replace the roof.

Your product. The same page says CGL policies don't cover property damage to your product arising out of the product or any part of it. Its example is a propane-powered appliance that malfunctions and causes a fire that damages a home, where the CGL policy may pay to repair the home and will not pay to repair or replace the appliance if the malfunction was caused because the appliance was faulty.

Your own policy wording decides how these two exclusions apply to you.

Contractual liability. In the CGL page's description, CGL policies exclude coverage for bodily injury or property damage that you are obligated to pay because you assumed liability in a contract or agreement, with two exceptions: liability you would have had without the contract, and liability assumed in a contract the policy defines as an insured contract, if the injury or damage occurs after the contract is executed. Whether a clause you have signed falls inside or outside that exclusion depends on your contract and your policy wording, and the page suggests talking to your agent if you have questions about your policy.

What TDI says about general liability and workers' compensation

General liability and workers' compensation are different coverages, according to TDI's CGL page. Among its examples of exclusions commonly contained in a CGL policy, TDI says: "CGL policies are not intended to provide coverage for workers' compensation or employer's liability."

TDI's business resources page has its own workers' compensation section, separate from its commercial insurance section, that links to employer resources. That page notes that complaints on workers' comp claims are handled by TDI's Division of Workers' Compensation, and gives the phone numbers 800-252-7031 and 512-804-4100.

How workers' compensation applies to your particular business is outside what this guide covers. The employer resources linked from that TDI page are the place to start.

Occurrence or claims-made: how TDI defines the two types

A liability policy may be an occurrence policy or a claims-made policy, and TDI's CGL page defines both. The difference is about when a claim has to be reported for the policy to respond.

• Occurrence. TDI says these "policies cover claims arising from injury or damage occurring while the policy is in force, regardless of when the claim is first made."
• Claims-made. TDI says these "policies cover claims that arise from injury or damage occurring during the policy period and reported to the insurer during the policy period." TDI adds that claims from events outside the policy period, or reported outside it, are not covered unless special coverage is purchased or arranged with the insurer.

The CGL page gives an example. A customer slips and falls in a showroom on April 15, 2010, and the business receives notice of a claim on December 15. In that example, an occurrence policy running from June 1, 2009, to May 31, 2010, will cover the claim because the incident occurred during the policy period. A claims-made policy with the same dates will not provide coverage because the claim was made after the policy expired, though the page adds that the claim may be covered if the business purchased an extended reporting period when the policy expired.

The page describes two forms of special coverage for a claims-made policy. Prior acts coverage, also called nose coverage, covers claims that arise from injury or damage occurring before the policy period but reported after the policy period begins, and does not cover claims that were known when the policy began. Run-off coverage, also called tail coverage or an extended reporting period, pays for residual claims made after the policy expires.

On timing, the page says: "A typical claims-made policy provides a short reporting period of 30 or 60 days after the policy's expiration date to file claims that arose too late to report before the policy expired." Run-off coverage, it continues, starts when that period ends, is provided for an additional premium, and may last one, three, or five years, or be unlimited.

TDI's advice there is that if a claims-made policy does not continue because it expires, cancels, or nonrenews, you should purchase either run-off coverage from your previous insurer or prior acts coverage from your new insurer to prevent coverage gaps. The same page notes that with surplus lines insurers, prior acts or run-off coverage may not be available.

A useful step is to know which type of policy you have before a claims-made policy ends.

Commercial property: the three levels TDI describes

Commercial property insurance is the coverage TDI describes for a business's building and business property, and TDI's commercial property guide sets out three levels of it. According to the guide, commercial property insurance pays to repair or replace your building and business property damaged by a fire, storm, or other event covered by the policy, and that it can also pay some of your lost income if your business is unable to operate normally.

Each level, the guide explains, protects against different causes of damage or loss.

In its special form description, TDI's guide says most policies exclude damages from floods, earth movement, war, nuclear disaster, wear and tear, and insects or vermin.

As TDI describes it, a special form policy works from a list of what is left out, so on that form the exclusions list is the place to look when you want to know whether a cause of loss is covered.

The guide also describes how a claim is valued: commercial property policies provide replacement cost coverage, actual cash value coverage, or a combination of both. In its description, replacement cost coverage pays to repair or replace your property at current costs, and actual cash value coverage pays replacement cost minus depreciation, which TDI describes as a decrease in value because of wear and tear or age. With actual cash value coverage, the guide warns, the policy might not pay enough to fully rebuild your business, and it recommends making sure your policy provides replacement cost coverage. Our guide on replacement cost coverage in Texas explains the same choice for home insurance.

Flood and coastal wind: what TDI says about each

Flood damage and, on the Texas coast, wind and hail damage may need coverage that is separate from a commercial property policy, according to TDI's commercial property guide. Both come with timing conditions that TDI spells out.

Flood. Most commercial property policies don't cover damage from flooding, according to the guide, and to be protected from flooding you'll need to buy a separate flood policy. Flood insurance, it adds, is sold by insurance companies that offer it and by the National Flood Insurance Program. On timing, the guide says: "There's a 30-day waiting period after you buy a flood policy before the coverage goes into effect." Our guide on flood insurance in Texas has more on how flood policies work.

Coastal wind and hail. The guide says that if your business is on the Texas coast or in Harris County on Galveston Bay, your policy probably doesn't cover wind and hail damage. In the guide's description, the Texas Windstorm Insurance Association (TWIA) offers wind and hail coverage for coastal residents and businesses, that TWIA coverage is bought through an insurance agent, and that depending on location you might need flood insurance before TWIA will sell you a policy. It adds: "TWIA won't sell you a policy if there's a hurricane in the Gulf of Mexico." Our guide on windstorm insurance and TWIA in Texas covers the detail.

Timing matters for both. TDI describes a waiting period for flood and a cutoff for TWIA, so these are questions to raise well before storm season.

Other coverages TDI lists

Beyond the three property forms, TDI's commercial property guide lists other coverages a business might need. Some are coverage types TDI describes on their own, and some are coverages that TDI says most companies offer as additions to a policy for an extra cost.

Coverage types TDI's guide describes on their own:

• Commercial auto. In the guide's description, commercial auto insurance includes liability and property damage protection for cars, trucks and vans that you use for business. Our guide on commercial auto insurance in Texas goes further.
• Crime. The guide's list of common crime coverages is robbery and safe burglary, forgery and alteration, employee theft, cyber crime, and money and securities coverage. Money and securities coverage, it explains, insures money, securities, and other property against losses that happen on or off the business site.
• Inland marine. Despite its name, the guide notes, inland marine coverage covers property kept on land. Its list includes accounts receivable, computers, contractor equipment, fine art, property in transit, valuable papers, and property held for others. The guide suggests asking your agent about it if your business uses property that isn't covered by your commercial property policy.

Additions that TDI's guide says most companies offer for an extra cost:

• Business interruption. An added-cost coverage in TDI's list that pays for the income you lose if your business can't operate normally because it was damaged or destroyed.
• Extra expense. An added-cost coverage in TDI's list that pays additional costs to return your business to normal after it's damaged.
• Ordinance or law. An added-cost coverage in TDI's list that pays extra construction or repair costs to meet current building codes.
• Newly acquired or constructed buildings. An added-cost coverage in TDI's list that insures a new building if you add it to your policy, and says: "You usually must add the new building within 30 days after starting construction or acquiring it."
• Valuable papers. An added-cost coverage in TDI's list that provides limited coverage for business records and other valuable papers.
• Boiler and machinery. An added-cost coverage in TDI's list for boilers, air conditioning units, compressors, steam cookers, electric water heaters, and similar machinery.

One more layer appears on TDI's CGL page. It describes umbrella liability insurance as excess liability coverage above the limits of automobile liability and CGL policies. See our guide on umbrella insurance in Texas.

One way to use these lists is as a set of questions for your agent about your own business, such as whether you hold other people's property, move equipment between sites, or depend on one building for your income.

Business owner's policies and premium audits

Two things shape how business coverage is packaged and billed: the business owner's policy and the premium audit. TDI describes the first in its commercial property guide and the second on its CGL page.

The business owner's policy. According to the property guide, many insurance companies offer business owner's policies that bundle multiple coverages together. It mentions them in its section on saving money on insurance.

The premium audit. The CGL page says most CGL policies are auditable policies and contain a condition commonly called a premium audit. It explains: "The premium that is paid at the inception of the policy is a deposit (estimated) premium." Auditable policies, it adds, usually use estimated payroll, sales, or units sold as the premium base for that deposit.

The page says the insurer is entitled to examine your books and records to determine whether the actual payroll, sales, or units sold are greater or less than what was estimated, usually after the policy expires, though it may also be done during the policy period. If the actual figures are greater than estimated, the page says you may owe additional premium, and if they are less you may be due a return premium.

The premium at the start of an auditable policy is an estimate, and the final figure may be settled after the actual numbers are checked. TDI's page calls it important to give an estimate that is as accurate as possible to avoid having to pay an additional premium, and its shopping tips suggest allowing for additional premium charges resulting from an audit when you prepare your budget.

Is business insurance required?

None of the TDI pages this guide draws on says what a particular small business in Texas must carry, and this guide does not answer that either. We're an insurance agency, not a law firm, so we're not going to tell you what you are or aren't required to carry. Check your own contracts, and ask TDI.

For questions, TDI's CGL page gives its Consumer Help Line as 800-252-3439, Monday to Friday, 8 a.m. to 5 p.m. Central time. For workers' compensation, TDI's business resources page links to resources for employers.

What does business insurance cost in Texas?

This guide gives no figure for what business insurance costs in Texas. The TDI pages it draws on do not publish one, and we won't invent a number.

TDI's commercial property guide says coverage and rates vary by company. Its CGL page says auditable policies usually use estimated payroll, sales, or units sold as the premium base for the deposit premium.

Both pages also give shopping tips:

• Comparing policies. The property guide's tip is to compare policies with similar coverage when comparing prices, and it notes that a lower-priced policy might provide less coverage.
• Deductibles. The property guide says policies with higher deductibles have lower premiums, and that if you choose a higher deductible you'll have to pay more out of pocket if you have a claim.
• Workplace safety. According to the property guide, improving the safety, security, and maintenance of your workplace might lower your risk for having a claim, which it says can help with what you pay in premiums.
• Factors other than price. The property guide suggests looking at an insurance company's financial rating and its complaint index, and says you can get both by calling 800-252-3439.
• Timing. The CGL page suggests providing your agent or insurance markets with claims history, coverage choices, and risk management efforts four months in advance.
• Licensing. The property guide says to buy only from licensed companies, and that if you buy from an unlicensed company your claims might not get paid.

According to the CGL page, insurance not available through licensed insurers may be placed with eligible surplus lines insurers. Our guide on surplus lines insurance in Texas explains that market for home insurance.

What to do with this

Reviewing small business coverage in Texas can start with a short list of steps you can take before you speak to an agent. The facts inside each step come from the TDI pages linked above.

• List the risks. Write down what could go wrong in your business, then note which of the coverages TDI describes relates to each: liability claims, the building and business property, vehicles used for business, and lost income.
• Check the policy type. Find out whether your liability policy is occurrence or claims-made before a claims-made policy ends.
• Read the exclusions. TDI's CGL page suggests carefully reviewing your policy and any endorsements, and its examples include the exclusions for your work, your product, and workers' compensation.
• Check the property form. See whether your property policy is basic, broad or special form, and whether it pays replacement cost or actual cash value.
• Ask about flood and coastal wind. TDI's guide says there's a 30-day waiting period after you buy a flood policy, and that TWIA won't sell a policy if there's a hurricane in the Gulf of Mexico.
• Estimate carefully. If your CGL policy is auditable, TDI's CGL page says an accurate estimate of payroll, sales, or units sold matters, because you may owe additional premium if the actual figures are higher.
• Read your lease and contracts. Note any insurance wording they contain before you choose limits.

Key facts

• TDI's CGL page describes CGL insurance as protecting business owners against liability claims for bodily injury, property damage, and personal and advertising injury, and says coverage varies by insurer.
• The same TDI page says that, generally, CGL policies exclude coverage for property damage to your work, with an exception if a subcontractor working for you caused the damage, and it lists workers' compensation and employer's liability among its example exclusions.
• Occurrence policies, in the definitions on TDI's CGL page, cover injury or damage that occurs while the policy is in force whenever the claim is first made, and claims-made policies cover injury or damage that occurs and is reported to the insurer during the policy period, unless special coverage is purchased or arranged with the insurer.
• TDI's commercial property guide describes basic, broad and special form coverage, and in its special form description says most policies exclude damages from floods, earth movement, war, nuclear disaster, wear and tear, and insects or vermin.
• Most commercial property policies don't cover flood damage, according to TDI's commercial property guide, which says flood protection means buying a separate flood policy, and that a 30-day waiting period applies after you buy one before the coverage goes into effect.
• The same TDI guide says a policy for a business on the Texas coast or in Harris County on Galveston Bay probably doesn't cover wind and hail damage, that TWIA offers that coverage, and that TWIA won't sell a policy while a hurricane is in the Gulf of Mexico.
• Most CGL policies are auditable, according to TDI's CGL page, which says the premium paid at inception is an estimated deposit, and that you may owe additional premium if actual payroll, sales, or units sold are greater than estimated or may be due a return premium if they are less.
• Complaints on workers' comp claims are handled by TDI's Division of Workers' Compensation, according to TDI's business resources page, at 800-252-7031 or 512-804-4100.

Sources: Texas Department of Insurance, Commercial general liability insurance, Commercial property insurance guide and Insurance resources for businesses. This page is general information, not legal advice; for a question about your own situation, check your policy or contact the Texas Department of Insurance.

Take the next step

Preparing for a conversation with your agent about small business coverage comes down to four lists you can make yourself. First, list what the business owns that would be hard to replace, such as premises, equipment, stock, tools that travel, and records. Second, list who comes into contact with your work, such as customers on your premises, clients whose property you work on, and people who use what you make. Third, pull out your lease and your largest client contracts and look for any insurance clause. Fourth, if you already have a liability policy, find out whether it is occurrence or claims-made.

Each list lines up with a part of this guide. The first is a question for the commercial property sections, the second for general liability and its exclusions, the third for the limits you choose, and the fourth for the occurrence and claims-made section.

This guide is general information about business coverages as TDI describes them. Our guides on commercial auto insurance in Texas, umbrella insurance in Texas and flood insurance in Texas cover related topics. Credify's own comparison is for home and auto insurance, so the offer below is about your personal policies.

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