If you're running a business in Katy, you're part of something special. The area just ranked as the 9th Most Entrepreneurial City in the United States for 2025, with over 6,660 new businesses launched in 2024 alone. From medical offices near the new Texas Heritage Marketplace to retail shops in the Katy Boardwalk District, the city's commercial landscape is exploding. But here's what most new business owners don't realize until it's too late: your commercial insurance needs are nothing like your personal coverage, and getting it wrong can sink your business faster than a bad quarter.
Why Katy's Business Boom Makes Insurance More Critical
Katy isn't just growing—it's transforming. The $400 million Texas Heritage Marketplace development alone is bringing 750,000 square feet of retail and restaurant space plus 300,000 square feet of medical office space. That's a lot of new neighbors for your business, which means more foot traffic, more opportunities, and yes, more liability exposure.
Here's the thing about running a business in Houston's suburbs: you're supporting the energy sector, serving a rapidly growing population, and operating in an area where severe weather isn't a question of if, but when. Your business insurance needs to reflect that reality. A retail shop in a strip center faces different risks than a medical office, which faces different risks than a service business operating out of a home office. But they all need protection.
The Core Coverage Your Katy Business Actually Needs
Most Katy business owners start with a Business Owners Policy, or BOP. Think of it as the starter pack for commercial insurance. It bundles general liability, commercial property coverage, and business interruption insurance into one package. For Texas small businesses, you're typically looking at $42 to $80 per month depending on your industry and revenue. That's less than your monthly phone bill, and it covers the basics: if someone slips in your store, if your equipment gets damaged, if a storm shuts you down for weeks.
General liability is your shield against customer injuries and property damage claims. If a customer trips over a display in your retail shop and breaks their arm, you're looking at tens of thousands in medical bills and potentially a lawsuit. Your general liability coverage handles that. Commercial property insurance covers your building, equipment, inventory, and furnishings when disaster strikes—whether that's a fire, theft, or vandalism.
But here's what catches people off guard: business interruption coverage. When Hurricane Harvey hit the Houston area, businesses didn't just lose property—they lost weeks or months of income while they rebuilt. Business interruption insurance covers your lost revenue and continuing expenses when a covered event forces you to close temporarily. For a thriving Katy business pulling in $50,000 a month, losing two months of income is a $100,000 hit that could end everything you've built.
The Texas Workers' Comp Surprise
Here's something that shocks new business owners: Texas doesn't require most private employers to carry workers' compensation insurance. It's one of the only states in the country where it's optional. You might think that's great news for your bottom line. It's not.
If you carry workers' comp, you're protected from most employee injury lawsuits—it's called the "exclusive remedy" rule. Employees get medical coverage and lost wages through the insurance, and in exchange, they can't sue you. But if you skip workers' comp to save money? An employee who gets hurt on the job can sue you for unlimited damages. They don't have to prove you were negligent. They just have to prove they got hurt while working for you. One serious injury could cost you everything.
The good news is that workers' comp rates have dropped 78% since 2003, now averaging just $0.51 per $100 of payroll. For Texas businesses, that typically works out to about $32 per month. For that price, you're buying peace of mind and legal protection. Most Katy business owners find that's a bargain.
Why Flood Insurance Isn't Optional for Commercial Properties
Let's talk about the coverage gap that destroys more Houston-area businesses than anything else: flooding. Your standard commercial property policy doesn't cover flood damage. Not a drop. If water comes up from the ground or falls from the sky and enters your building, you're on your own unless you have a separate flood policy.
For commercial properties in Katy, flood insurance isn't just about hurricanes. A clogged drain during a normal rainstorm can turn into a catastrophic event. The National Flood Insurance Program offers commercial policies with up to $500,000 in building coverage and $500,000 in contents coverage. Private insurers often offer higher limits and sometimes better rates. The key is having it before you need it—flood policies typically have a 30-day waiting period before coverage kicks in.
Remember, flooding isn't just about replacing damaged equipment and repairing buildings. It's about the time your facility can't be used. That's where business interruption coverage tied to your flood policy becomes critical. You need both to survive a major flood event.
Getting Started: What to Do Right Now
If you're launching a business in Katy's booming commercial market, start with a Business Owners Policy. Get quotes from multiple insurers—rates can vary significantly based on your specific location, industry, and revenue. Most Texas small businesses pay between $500 and $3,000 annually for basic coverage, with a good rule of thumb being $1,000 to $3,000 per million dollars of property coverage.
Add workers' compensation even though Texas doesn't require it. The legal protection alone is worth the modest cost. Then assess your flood risk honestly. If you're in a retail center, medical office building, or any ground-floor commercial space in the Houston area, you need flood coverage. Period.
Finally, work with an agent who understands Katy's unique commercial landscape. You're not just buying insurance—you're protecting the business you're building in one of America's most entrepreneurial cities. The right coverage lets you focus on growth instead of worry. And in a market as hot as Katy's, that focus is everything.
