If you're planning to work as an electrical contractor in Texas, understanding your insurance requirements isn't optional—it's the barrier between you and your license. The Texas Department of Licensing and Regulation won't even process your application without proof you've got the right coverage in place. Here's what might surprise you: Texas takes a different approach than most states when it comes to workers' comp, and the general liability minimums the state requires are actually lower than what you'll need for most commercial jobs.
Let's break down exactly what you need, what it costs, and how to stay compliant without overpaying or leaving yourself exposed.
General Liability Insurance: Your Licensing Prerequisite
Before the Texas Department of Licensing and Regulation will approve your electrical contractor license, you need to show proof of general liability insurance that meets specific minimums. These aren't suggestions—they're hard requirements spelled out in the Texas Administrative Code. Your policy must include at least $300,000 per occurrence for combined bodily injury and property damage, $600,000 in general aggregate coverage, and $300,000 aggregate for products and completed operations.
Here's what that actually means in practice. The per occurrence limit is what your insurance will pay for a single incident—say, if you accidentally damage a client's HVAC system while running new wiring. The general aggregate is the total your policy will pay across all claims during your policy period. The products and completed operations aggregate covers you after the job is done, like if faulty wiring you installed causes a fire six months later.
But here's the reality check: those state minimums won't get you far in the commercial market. Most general contractors and commercial property owners require $1 million per occurrence as a baseline. Many larger projects demand $2 million or more. You can get licensed with the state minimums, but you'll struggle to land contracts. Most electrical contractors start with a $1 million policy from day one to avoid having to upgrade later.
Workers' Compensation: Texas's Unique Approach
Texas is the only state in the country that doesn't require most private employers to carry workers' compensation insurance. Yes, you read that right. As an electrical contractor, you have a choice: you can buy workers' comp coverage, or you can opt out entirely by filing a notice of non-coverage with the Texas Department of Insurance.
When you apply for your electrical contractor license, TDLR requires you to address this directly. You must submit either proof of workers' comp coverage or a signed statement confirming you've elected not to carry it. If you choose to go without coverage, you're legally required to file an annual notice with TDI and post notices at your workplace informing employees that you don't provide workers' comp benefits.
Before you celebrate avoiding another insurance expense, understand what you're giving up—and what you're taking on. Employers who opt out of workers' comp lose most of their legal protections against employee lawsuits. If one of your electricians gets hurt on the job and you don't have coverage, they can sue you for the full amount of their damages in civil court. You can't claim common law defenses like contributory negligence. The lawsuit risk alone makes many contractors stick with workers' comp coverage.
Plus, if you're bidding on government contracts or work for federal, state, or municipal entities, workers' comp isn't optional—it's mandatory. Many large commercial general contractors also require it as a condition of subcontracting agreements. So while Texas gives you the option to skip it, your clients might not.
Getting Licensed: The Master Electrician Requirement
Insurance is just one piece of the licensing puzzle. To operate as an electrical contractor in Texas, you must designate a licensed Master Electrician as your electrician of record. This can be you if you hold a Master Electrician license, or it can be someone you employ. The catch: that Master Electrician can only serve as the designated electrician for one contracting company, unless they own more than 50% of the business.
The application process costs $110 upfront, and you'll pay $165 annually to renew. Your license is valid for one year from the issue date. TDLR will run a criminal background check on all applicants, including fingerprinting. And here's the important part: your insurance has to stay current for the entire license period. If your general liability policy lapses, your license can be suspended or revoked.
Choosing the Right Insurance Provider
Texas has specific requirements about where you can buy your insurance. Your general liability coverage must come from an admitted insurance carrier in Texas or an eligible surplus lines carrier. The policy also needs to be from a company rated B+ or higher by A.M. Best Company, which is an independent rating agency that assesses the financial strength of insurance companies.
Why does this matter? Working with a non-admitted carrier or a poorly rated company might save you money upfront, but TDLR won't accept it for licensing purposes. You'll waste time and money on a policy you can't actually use. When you're shopping for coverage, verify the carrier's admission status and A.M. Best rating before you buy.
Additional Coverage to Consider
While general liability and workers' comp are the big two, most electrical contractors need more than the bare minimum to run a sustainable business. Commercial auto insurance covers your work trucks and any company vehicles your employees drive. If you're hauling expensive tools and equipment, inland marine insurance protects that gear even when it's off your property—like when your $15,000 worth of wire pullers and conduit benders gets stolen from a job site.
Professional liability insurance, sometimes called errors and omissions coverage, protects you if a client claims your design work or advice caused them financial harm. And if you store client data or handle any kind of digital information, cyber liability insurance is becoming increasingly important as ransomware and data breach risks grow.
How to Get Started and Stay Compliant
Start by getting quotes for general liability insurance that meets or exceeds the state minimums. Most electrical contractors find that a $1 million per occurrence policy is the sweet spot—it satisfies the licensing requirement and keeps you competitive for commercial work. Decide whether you're going to carry workers' comp or opt out, understanding the tradeoffs of each approach.
When your insurance is in place, use the official Electrical Contractor Certificate of Insurance form from TDLR to document your coverage. This form goes directly to your insurance provider, who fills it out and sends it back to you. Include it with your completed license application and the $110 fee. Set a calendar reminder for your annual renewal—both for your license and your insurance policies. Letting either lapse can shut down your business overnight.
Getting the right insurance coverage isn't just about checking a box for TDLR. It's about protecting your business from the kinds of claims that can wipe out years of hard work. The requirements might feel like red tape, but they're actually the foundation of a sustainable electrical contracting business in Texas. Get your coverage right from the start, and you'll spend less time worrying about compliance and more time growing your client base.
