If you're launching an online store in Texas, you're probably wondering what insurance you actually need versus what's just nice to have. Here's the good news: Texas is one of the most business-friendly states when it comes to mandatory insurance requirements. But before you celebrate, understand that 'not required' doesn't always mean 'not necessary.' Let's break down what you really need to protect your e-commerce business.
What Insurance Does Texas Actually Require?
The short answer for most e-commerce businesses? Not much. Texas doesn't mandate general liability insurance, professional liability, or even workers' compensation for private employers. If you're running your online store from home with no employees and no business vehicles, you could technically operate without any business insurance at all.
But here's where it gets real: if you use any vehicle for business purposes—delivering products, picking up inventory, meeting with suppliers—you must carry commercial auto insurance with minimum limits of $30,000 per person for bodily injury, $60,000 per accident for bodily injury, and $25,000 for property damage. Those minimums are often too low for serious accidents, so many businesses carry higher limits.
A few specific industries face additional requirements. If your e-commerce business involves electrical work, HVAC services, or fire safety equipment, you'll need general liability coverage mandated by state law. But for most online sellers—whether you're dropshipping, selling handmade goods, or running a digital products store—there are no state-mandated insurance requirements beyond commercial auto if applicable.
The Workers' Comp Wildcard
Here's something that surprises most business owners: Texas is the only state where workers' compensation insurance is optional for private employers. If you hire employees—even part-time warehouse workers or customer service reps working from home—you get to choose whether to carry workers' comp.
Sounds great, right? Here's the catch: if you opt out (becoming what's called a 'non-subscriber'), you're fully exposed to employee injury lawsuits. In other states, workers' comp is your shield—employees can't sue you for workplace injuries because they're covered by workers' comp instead. In Texas, without coverage, an injured employee can take you to court. Even a simple repetitive stress injury from packing boxes could turn into a lawsuit that costs far more than the average $32 per month workers' comp premium.
If you do choose to skip workers' comp, Texas requires you to file annual notices with the Texas Department of Insurance and notify your employees in writing that they're not covered. You'll also need to report any work-related injuries that result in more than one day of lost time. It's legal, but it's a calculated risk that many small business attorneys advise against.
When Contracts Require Coverage
Even though Texas doesn't require general liability insurance, your business partners might. If you're selling on Amazon, partnering with wholesalers, leasing warehouse space, or working with any commercial client, you'll likely face contract requirements for general liability coverage.
Common requirements range from $500,000 to $2 million per occurrence, with a $2 million aggregate (total annual limit). For most e-commerce businesses, a standard $1 million per occurrence, $2 million aggregate policy costs around $42 per month. That's cheap insurance considering a single customer injury claim—say someone gets hurt by a defective product you sold—could easily exceed six figures.
General liability covers customer injuries, property damage, and advertising injury (like copyright claims on your marketing materials). If you lease a warehouse or retail space, your landlord will almost certainly require proof of coverage before you sign the lease. Even co-working spaces and shared warehouse facilities typically mandate it.
Cyber Liability: The Insurance You Didn't Know You Needed
If your e-commerce business stores customer credit card numbers, email addresses, or any personal information, cyber liability insurance should be on your radar. Texas doesn't require it, but one data breach could destroy your business. The average cost of a data breach in 2026 exceeds $4.5 million, and even small breaches cost tens of thousands in notification costs, credit monitoring services, and legal fees.
Cyber insurance covers breach response costs, customer notification, credit monitoring, legal defense, and even ransomware payments in some cases. For Texas e-commerce businesses, premiums average around $71 per month depending on your revenue and data security practices. If you process payments through Shopify, WooCommerce, or similar platforms, you're storing sensitive data—even if the payment processor handles the actual credit card numbers.
Licensing Requirements for Texas E-commerce
While we're on the topic of requirements, let's cover licensing. Texas doesn't require a general business license, which confuses many new business owners. Instead, you'll need a sales and use tax permit from the Texas Comptroller—completely free through their eSystems portal. This applies to virtually all e-commerce sellers, even dropshippers and remote sellers shipping into Texas.
You'll also need to register your business with the Texas Secretary of State (for LLCs and corporations) or file an assumed name certificate with your county clerk (for sole proprietors using a DBA). But watch out for local requirements—many Texas cities and counties require home occupation permits even for businesses operating entirely online. These vary widely by location, so check with your city's business licensing department before you launch.
How to Get Started
Start by assessing your actual risk. Do you have employees? You need to seriously consider workers' comp despite it being optional. Storing customer data? Cyber liability isn't negotiable. Working with commercial partners or leasing space? Budget for general liability before you sign contracts.
Most e-commerce businesses benefit from a business owner's policy (BOP), which bundles general liability and commercial property insurance at a discount. If you carry inventory, the property coverage protects your stock from theft, fire, and other covered losses. Combined with cyber liability, this gives you solid protection for under $150 per month in most cases.
Get quotes from multiple insurers and compare not just price but coverage details. The cheapest policy isn't always the best value, especially when you're comparing cyber liability policies that vary widely in what they cover. Work with an independent agent who specializes in e-commerce businesses—they'll know which carriers offer the best coverage for online sellers and can help you avoid gaps that could leave you exposed.
