Here's something that catches most Texas business owners off guard: you're probably going to need general liability insurance even though the state doesn't require it. Sounds contradictory, right? But here's the reality—while Texas law doesn't mandate general liability coverage for most businesses, your landlord almost certainly will. So will many of your clients. And definitely your lender if you're financing your business.
The good news? General liability insurance is more affordable than you might think, and it protects you from the kinds of everyday accidents that can derail a business overnight. Whether you're running a plumbing company in Houston, a consulting firm in Austin, or a retail shop in San Antonio, understanding how general liability works in Texas will help you get the right protection at the right price.
What General Liability Insurance Actually Covers
Think of general liability insurance as your business's safety net for accidents involving other people or their property. Commercial General Liability (CGL) policies protect you against three main types of claims that could otherwise cost you tens of thousands—or even millions—of dollars out of pocket.
First up is bodily injury liability. This covers medical expenses, lost wages, and legal costs if someone gets hurt because of your business operations. A customer slips on your wet floor? Covered. A client trips over your equipment at their office? Covered. These accidents happen more often than you'd think, and medical bills add up fast.
Property damage liability is next, and it protects you when your business damages someone else's property. Maybe your employee accidentally backs into a client's car, or your equipment damages a wall at a job site. Without this coverage, you're paying for repairs yourself—and potentially facing a lawsuit on top of it.
The third piece—personal and advertising injury—covers claims related to slander, libel, copyright infringement, or false advertising. If a competitor claims your ad campaign infringed on their trademark, or someone sues over content you published, this coverage steps in. In today's social media world, these claims are becoming more common.
Many Texas policies also include premises and operations coverage, which specifically protects against injuries or damage occurring on your business property or as a result of your day-to-day operations. And if your business sells products or completes projects, you'll want products and completed operations coverage—this protects you after your work is done and the customer takes possession.
Does Texas Actually Require General Liability Insurance?
Here's where it gets interesting. Texas state law doesn't require general liability insurance for most businesses. You won't find a blanket mandate that says "all Texas businesses must carry this coverage." But before you decide to skip it, understand that practical reality is very different from legal requirements.
If you're leasing commercial space—and most businesses are—your landlord will require proof of general liability insurance before you sign the lease. They're protecting themselves from liability if something happens on the property. Many landlords require at least $1 million in coverage, and they'll want to be named as an additional insured on your policy.
Certain licensed trades in Texas do have specific requirements. Electricians must carry $300,000 per incident coverage plus $600,000 in annual aggregate coverage. Electrical sign contractors have identical requirements. Fire safety companies need at least $100,000 per incident. If you're in a licensed trade, check with your licensing board for exact requirements—operating without proper coverage can cost you your license.
Beyond legal requirements, clients increasingly require proof of insurance before they'll work with you. Large corporations often require vendors to carry $2 million or more in coverage. Even smaller clients want to know you're insured—it's a sign you're a legitimate, professional operation. In 2024, about 70% of Texas small businesses carried general liability insurance, showing just how standard it's become.
What You'll Pay for Coverage in Texas
The cost of general liability insurance in Texas varies widely based on what you do, where you're located, and how much coverage you need. Most small Texas businesses pay between $500 and $1,000 per year for standard $1 million per occurrence coverage. That works out to about $42 to $85 per month—less than many businesses spend on internet service.
But here's the catch: your industry makes a huge difference. Office-based businesses like consultants, accountants, or software companies typically pay on the lower end—sometimes as little as $17 per month for basic coverage. You're working in a relatively low-risk environment with minimal chance of causing injury or property damage.
Construction trades, manufacturers, and restaurants sit at the other end of the spectrum. A general contractor might pay $800 to $928 monthly because of the higher risk of injuries and property damage. Restaurants face similar costs due to slip-and-fall risks and food-related liability exposure. The insurance company is calculating the likelihood they'll have to pay a claim, and some businesses simply have more things that can go wrong.
Several other factors affect your premium. Your business's annual revenue matters—higher revenue typically means higher premiums because there's more at stake. Your claims history plays a role too; businesses with past claims pay more. Even your location within Texas matters. Urban areas like Houston or Dallas may have higher rates than rural areas due to higher litigation rates and cost of living. And of course, the coverage limits you choose directly impact cost—$2 million in coverage costs more than $1 million.
Choosing the Right Coverage Limits
Most Texas businesses opt for $1 million per occurrence with a $2 million aggregate limit. That means the insurance will pay up to $1 million for any single claim, and up to $2 million total during your policy year. This is the sweet spot for many businesses—it's enough to cover most incidents without being unnecessarily expensive.
That said, you might need more coverage depending on your situation. If you work with large corporations, they often require $2 million or even $5 million in coverage as a condition of doing business. High-risk industries should also consider higher limits—one serious injury can easily exceed $1 million when you factor in medical costs, lost wages, and legal fees.
If your business needs more protection than standard general liability provides, consider umbrella or excess liability insurance. These policies kick in once your general liability limits are exhausted, providing an extra layer of coverage. Umbrella policies are particularly affordable—you can often add $1 million in umbrella coverage for just a few hundred dollars per year.
Getting Started with Texas General Liability Insurance
Shopping for general liability insurance doesn't have to be complicated. Start by gathering some basic information about your business: your annual revenue, number of employees, what you do, and where you operate. You'll also want to know if you have any contractual requirements—check your commercial lease or client contracts for specific coverage requirements.
Get quotes from at least three insurers. Prices can vary significantly between companies, especially based on their experience with your industry. Some insurers specialize in certain business types and offer better rates because they understand the risks better. Don't just look at price—check what's actually covered, the deductibles, and any exclusions.
Consider bundling your insurance. Many insurers offer Business Owner's Policies (BOPs) that combine general liability with commercial property insurance at a discount. If you need multiple types of coverage—like general liability, commercial auto, and workers' compensation—bundling with one carrier often saves money and simplifies management.
The bottom line? General liability insurance is one of those things you hope you'll never need—but you'll be incredibly grateful to have when something goes wrong. Whether you're protecting yourself from a customer's slip-and-fall or a client's property damage claim, having the right coverage means you can focus on running your business instead of worrying about what one accident could cost you. For most Texas businesses, it's not just smart protection—it's essential for doing business.
