Starting a catering business in Texas? You're entering one of the most exciting—and risky—industries out there. Between transporting food across town, setting up at unfamiliar venues, and serving hundreds of guests at events, there's a lot that can go wrong. One food poisoning claim or vehicle accident could wipe out everything you've built. That's where insurance comes in. But here's the tricky part: Texas has some unusual insurance rules that catch a lot of new caterers off guard.
Unlike most states, Texas doesn't require workers' compensation insurance. And while general liability insurance isn't legally mandated at the state level, you'll quickly discover that virtually every venue, event planner, and commercial client requires it before you can serve a single appetizer. Let's break down exactly what you need to operate legally and protect your business in the Lone Star State.
The Texas Workers' Comp Exception You Need to Know
Here's something that surprises almost everyone: Texas is the only state where private employers can legally choose not to carry workers' compensation insurance. That sounds like a cost-saving opportunity, right? Not so fast. While you won't get fined by the state for skipping workers' comp, you're trading that premium for something potentially much more expensive—unlimited legal liability.
If one of your kitchen staff burns themselves on a hot pan, or a server trips while carrying a tray and breaks their wrist, they can sue you directly for medical expenses, lost wages, pain and suffering—the works. Without workers' comp, you lose most of the legal protections that normally shield employers from these lawsuits. For Texas catering businesses, the typical cost is around $22 per month per employee, or about $0.45 per $100 in payroll. That's a bargain compared to a single lawsuit that could easily reach six figures.
If you do decide to operate without workers' comp coverage, you must file DWC Form-005 with the state between February 1 and April 30 every year. This notifies Texas that you're a non-subscriber. Miss this deadline, and you could face penalties that make the insurance premium look like pocket change.
General Liability Insurance: Not Required by Law, But Required by Everyone Else
Texas doesn't mandate general liability insurance for catering businesses at the state level. But before you celebrate, know this: your business won't survive without it. Event venues, hotels, wedding planners, corporate clients—virtually everyone you'll work with requires proof of general liability coverage before you can set foot on their property. Most commercial leases require it too. So while it's technically optional, it's functionally mandatory.
General liability insurance protects you when guests get sick from your food, when someone slips on a spill your team didn't clean up quickly enough, or when your staff accidentally damages a client's property during setup. For caterers, these aren't hypothetical scenarios—they're Tuesday. Coverage typically costs between $68 and $141 per month, depending on whether you get a standalone policy or bundle it into a Business Owner's Policy (BOP). A BOP includes general liability plus commercial property insurance for your equipment, inventory, and business income protection if a covered loss shuts you down temporarily.
Expect to pay between $2,500 and $4,500 annually for comprehensive catering insurance in Texas. If you operate at off-site events (which most caterers do), add another $500 to $1,000 per year to account for the increased risks of transportation and unfamiliar venue setups.
Commercial Auto Insurance: The Legal Requirement You Can't Skip
If your catering business uses vehicles to transport food, equipment, or staff to events, commercial auto insurance isn't optional—it's the law. Texas requires a 30/60/25 split for commercial vehicle liability coverage. That means $30,000 for bodily injury per person, $60,000 for total bodily injury per accident, and $25,000 for property damage per accident.
These minimums apply to every vehicle your business operates, whether it's a cargo van hauling catering equipment or a sedan you use for client meetings. Keep in mind that these state minimums are exactly that—minimums. If you cause a serious accident, $30,000 per person won't come close to covering medical bills for significant injuries. Most insurance professionals recommend carrying much higher limits to protect your business assets.
Liquor Liability: Essential Coverage for Events Serving Alcohol
Planning to serve wine at weddings or provide bar service at corporate events? You need liquor liability insurance—and no, your general liability policy won't cover alcohol-related claims. Texas requires businesses that sell, serve, or furnish alcohol to carry separate liquor liability coverage.
This coverage protects you if an intoxicated guest causes an accident after leaving your event, or if someone gets injured due to another guest's alcohol consumption at an event you catered. Given Texas's social host liability laws and dram shop statutes, this coverage isn't just smart—it's critical. Venues serving alcohol will require proof of this coverage before your contract is finalized.
Licensing and Permits: The Foundation of Legal Operation
Before you worry about insurance, you need to handle the basics. All catering businesses in Texas must obtain a retail food establishment permit from the Department of State Health Services. Here's the catch: you cannot operate a catering service from your home kitchen alone. Texas requires catering businesses to affiliate with a fixed facility that holds a valid food establishment permit.
The permit fees are based on your gross annual food sales volume. Before you can even apply, you need a Texas sales tax ID number. Once you submit your application and payment, an inspector will visit your facility before issuing the permit. On the employee side, Texas requires all food service workers to complete an accredited Food Handler Training Course within 60 days of employment. These certifications are valid for two years and cannot cost more than $15 by state law. Additionally, you must employ at least one Certified Food Manager at your establishment.
Getting Started: Building Your Insurance and Compliance Foundation
The right order matters when launching your catering business in Texas. Start by securing your fixed facility location and applying for your retail food establishment permit. Get your sales tax ID in place first—you'll need it for the permit application. While waiting for your facility inspection, start shopping for insurance quotes. Get general liability coverage and commercial auto insurance lined up before you book your first client.
Even though Texas doesn't require workers' comp, factor it into your budget if you're hiring employees. The peace of mind and legal protection are worth the modest monthly cost. If you're planning to serve alcohol at any events, add liquor liability to your coverage package from day one. Once your insurance is in place, make sure your team completes their food handler training within the required timeframe and identify who will serve as your Certified Food Manager.
Running a successful catering business in Texas means understanding that while the state gives you flexibility on some insurance requirements, your clients and the practical realities of the industry don't. Invest in comprehensive coverage from the start, maintain your permits and certifications, and you'll build a business that's protected against the inevitable bumps along the way. The cost of proper insurance is a fraction of what you'll pay if something goes wrong without it.
