If you're running a home remodeling business in Texas, you've probably noticed something unusual: the state doesn't require much by way of licensing or insurance. That might sound like good news, but here's the reality—your clients, municipalities, and the projects you want to land absolutely do have requirements. And if you show up without the right coverage, you won't even get to submit a bid.
Texas takes a hands-off approach compared to most states, which means the burden falls on you to understand what coverage you actually need. Let's break down exactly what insurance requirements apply to home remodeling contractors in Texas, what's optional but practically essential, and how to avoid the costly mistakes that sink businesses.
No State License, But Cities Have Their Own Rules
Texas doesn't require general contractors to hold a state license for remodeling work. You read that right—no state license requirement. However, this doesn't mean you can operate without any oversight. Cities across Texas have stepped in to fill that gap.
In Dallas, you need to register as a contractor and provide proof of liability insurance before pulling permits. Austin requires residential contractors to submit a certificate of liability insurance as part of their registration. San Antonio mandates registration for home improvement contractors doing repairs, replacements, and non-structural remodeling. Each city sets its own standards, and the penalties for working without proper registration can include fines and project shutdowns.
If you do specialized work—electrical, plumbing, or HVAC—you absolutely need a state license, and those licenses come with their own insurance minimums. Electricians and Class A HVAC contractors must carry at least $300,000 in liability coverage. Class B HVAC contractors need $100,000. These aren't suggestions; they're hard requirements to maintain your license.
General Liability Insurance: Not Required by Law, But Required by Reality
Here's where Texas contractors get tripped up. The state doesn't mandate general liability insurance for remodeling businesses. Technically, you could operate without it. But practically? You won't survive.
Almost every homeowner, general contractor, and municipality will require you to provide a Certificate of Insurance before you start work. They want to know that if your crew damages their property or someone gets hurt on the job site, they're not on the hook financially. Without that certificate, you won't get the contract—period.
The industry standard in Texas is $1 million per occurrence and $2 million aggregate. That means your policy covers up to $1 million for any single incident and up to $2 million total during the policy period. Some larger projects or commercial clients may require even higher limits, but $1M/$2M is the baseline you need to be competitive.
General liability covers bodily injury, property damage, and personal injury claims. If a client trips over your tools and breaks an arm, if your crew accidentally punctures a water line and floods a basement, or if you're accused of damaging a client's property—this policy handles it. Without it, you're paying out of pocket, and those costs can bankrupt a small business fast.
Workers' Compensation: Optional for Private Work, But Don't Skip It
Texas is the only state in the country that doesn't require private employers to carry workers' compensation insurance. If you're a remodeling contractor working exclusively on private residential projects, you can legally operate without it.
But should you? Absolutely not. Here's why: if one of your employees gets hurt on the job and you don't have workers' comp, they can sue you directly. In most states, workers' comp protects employers from lawsuits by providing a no-fault system. In Texas, you lose that protection. An injured worker can take you to court, and if they win, the judgment can wipe out your business.
Even if you're willing to take that risk, your clients probably aren't. General contractors and developers routinely require subcontractors to carry workers' comp before they'll hire you. If you bid on government contracts—city, county, state, or federal—workers' compensation is mandatory. No exceptions. There's no employee threshold; if you have even one person working on a government project, you need coverage.
Pending legislation may change the landscape entirely. House Bill 480, which could take effect in late 2025, would require all building and construction contractors to provide workers' compensation coverage for their employees. If that passes, the optional status goes away, and every remodeling contractor in Texas will need to comply.
Commercial Auto Insurance: Required If You Drive for Work
If you or your employees drive company-owned vehicles to job sites, Texas requires commercial auto insurance. The minimum liability limits are $30,000 per person for bodily injury, $60,000 per accident for bodily injury, and $25,000 for property damage—often written as 30/60/25.
Those minimums are low, and they won't cover much in a serious accident. Most contractors opt for higher limits to protect their assets. If your work truck causes an accident that injures multiple people or totals an expensive vehicle, $60,000 won't go far. Consider $100,000/$300,000/$100,000 or even higher, especially if you're hauling expensive tools and materials.
Don't assume your personal auto policy will cover business use. It won't. If you're driving to a job site, hauling materials, or using your vehicle for any work-related purpose, you need commercial coverage. Otherwise, a claim could be denied, leaving you personally liable.
Additional Coverage to Consider
Beyond the basics, there are a few other policies that Texas remodeling contractors should evaluate based on their specific operations. Tools and equipment insurance covers your gear if it's stolen from a job site or damaged. If you carry $50,000 worth of tools in your truck, this coverage can save you from a massive out-of-pocket replacement cost.
Umbrella insurance provides extra liability protection above your general liability and auto policies. If you face a claim that exceeds your primary coverage limits, umbrella insurance kicks in. It's relatively inexpensive for the additional protection it provides.
Professional liability insurance, also called errors and omissions insurance, protects you if a client claims your work didn't meet professional standards or caused them financial harm. This matters most if you provide design services, consulting, or project management in addition to hands-on remodeling.
How to Get Started with Insurance for Your Remodeling Business
Start by identifying which city or county you'll be working in and checking their specific registration and insurance requirements. Contact your local building department or visit their website to get the exact details.
Next, reach out to an insurance agent who specializes in contractor coverage. They'll help you bundle general liability, commercial auto, workers' comp, and any additional policies you need. Bundling often saves money and simplifies billing.
Make sure your agent understands the type of work you do. Kitchen and bathroom remodeling carries different risks than structural work or outdoor additions. Your coverage should match your actual operations, not a generic contractor template.
Finally, keep your certificates of insurance current and readily available. Clients will ask for them before signing contracts, and you don't want to lose a job because your paperwork is outdated. Set reminders for policy renewals, and work with your agent to adjust coverage as your business grows. Texas may not require much, but the market does—and protecting your business is the smartest investment you'll make.
