If you're thinking about starting a handyman business in Texas, you've picked one of the most business-friendly states in the country. Unlike many states that require extensive licensing and mandatory insurance for general contractors, Texas keeps the barrier to entry refreshingly low. You won't need a state-issued handyman license, and insurance requirements are minimal for basic handyman work. But that doesn't mean you should skip insurance entirely. Here's what you actually need to know about protecting your handyman business in the Lone Star State.
Do You Need a License to Be a Handyman in Texas?
Here's the good news: Texas doesn't require a state-level handyman license. If you're doing general handyman work like painting, basic carpentry, drywall repair, deck building, or minor home repairs, you can legally operate without a license. There's no project size limit either, which is unusual. Most states cap unlicensed work at a certain dollar amount, but Texas doesn't impose those restrictions.
That said, there are two important exceptions. First, specialty work requires licensing. If you're doing electrical work, plumbing, HVAC installation, or air conditioning repairs, you'll need to get licensed by the Texas Department of Licensing and Regulation. Second, major cities have their own rules. Austin requires registration with the Development Services Department before starting certain projects. Dallas requires general contractor registration for specific residential work. San Antonio requires home improvement contractor registration for minor residential jobs. Check your local city ordinances before you assume you're in the clear.
General Liability Insurance: Not Required, But Essential
Texas doesn't legally require general liability insurance for handyman businesses. You could technically operate without it. But here's why that's a terrible idea: one accident can bankrupt your business. Say you're installing shelves and accidentally drill into a water pipe. Or you're repairing a deck and a client trips on your tools and breaks their wrist. Without general liability insurance, you're personally on the hook for all the damage, medical bills, and legal fees.
General liability insurance covers bodily injury, property damage, and advertising injury claims. The typical policy for handymen includes $1 million per occurrence and $2 million aggregate coverage, which means the insurance company will pay up to $1 million for a single claim and up to $2 million total during the policy period. Most Texas handymen pay between $67 and $92 per month for this coverage. That's less than $1,100 a year to protect your livelihood. It's one of the best investments you'll make.
Even though Texas doesn't mandate it, many clients do. Commercial property managers, homeowners associations, and government entities often require proof of insurance before they'll hire you. You'll need a certificate of insurance showing your coverage limits. Some contracts specify minimum coverage amounts, typically $300,000 to $1 million per occurrence. If you're doing specialty work like electrical or HVAC, the requirements are even stricter. Electrical contractors must carry at least $300,000 per occurrence for property damage and bodily injury, $300,000 aggregate for completed operations, and $600,000 total aggregate.
Workers' Compensation: Optional Now, But Watch the Laws
Texas is the only state in the country where workers' compensation insurance is optional for most private employers. If you're a solo handyman with no employees, you don't need it. If you hire workers, you can choose whether to carry it. But there are major exceptions and risks you need to understand.
First, government contracts require it. If you bid on any government construction project, whether it's city, county, state, or federal, you must provide workers' compensation coverage for employees working on that project. Second, many general contractors and commercial clients require their subcontractors to carry workers' comp, even if they only have one employee. You'll lose out on lucrative contracts if you don't have it.
Third, the legal landscape might be changing. Proposed legislation in 2025, including Senate Bill 338 and House Bill 480, could make workers' compensation mandatory for all construction contractors in Texas. If Senate Bill 338 passes, contractors would need coverage by September 1, 2025, or face daily fines of $500 and disqualification from construction contracts. Even if these bills don't pass immediately, the trend is clear: Texas is moving toward mandatory coverage.
If you choose to operate without workers' comp, you're called a non-subscriber. Non-subscribers must file an annual notice with the Texas Department of Insurance and post notices at the workplace informing employees they don't have coverage. More importantly, you lose lawsuit immunity. If you carry workers' comp and an employee gets injured, they can't sue you unless the injury was caused by your intentional negligence. Without it, employees can sue for full damages, including pain and suffering. One serious injury could cost hundreds of thousands of dollars.
Other Insurance Coverage to Consider
Beyond general liability and workers' comp, there are a few other policies worth considering. Commercial auto insurance is legally required in Texas if you use a vehicle for business purposes. The state minimum is $30,000 per person for bodily injury or death, and $60,000 per accident for injuries to multiple people. If you're driving to job sites with tools and materials in your truck, you need commercial auto coverage. Your personal auto policy won't cover business use.
Tools and equipment insurance, sometimes called inland marine insurance, protects your gear if it's stolen, damaged, or destroyed. As a handyman, your tools are your livelihood. A comprehensive inland marine policy typically costs a few hundred dollars a year and covers everything from power tools to ladders to specialty equipment.
Professional liability insurance, also called errors and omissions insurance, covers claims that you made a mistake or failed to complete work properly. If a client says your repair work was faulty and caused additional damage, professional liability covers your legal defense and any settlements. This is particularly important if you do consulting work or provide advice on home improvement projects.
Getting Started: Practical Steps to Protect Your Business
Start by getting quotes for general liability insurance from multiple providers. Insureon, NEXT Insurance, and Thimble all specialize in coverage for contractors and can provide instant online quotes. Compare coverage limits, deductibles, and exclusions carefully. Don't just pick the cheapest option. Look for policies that specifically cover the type of work you do.
If you plan to hire employees or bid on commercial contracts, get workers' compensation quotes at the same time. Many insurers offer package policies that bundle general liability, workers' comp, and commercial auto coverage at a discounted rate. A Business Owner's Policy combines several coverages into one convenient package and often costs less than buying each policy separately.
Check your local city requirements before you start working. Even though Texas doesn't require state licensing, your city might have registration or permit requirements. Austin, Dallas, and San Antonio all have specific rules for contractors doing residential work. Register with the appropriate city department and keep your registration current.
Texas makes it easy to start a handyman business, but don't let the lack of legal requirements lure you into skipping insurance. General liability coverage is affordable and essential. Workers' compensation might not be required today, but it could be soon, and many clients require it anyway. Protect your business, protect your assets, and you'll sleep better knowing one accident won't wipe out everything you've built. The cost of insurance is minimal compared to the risk of operating without it.
