If you're starting a painting business in Texas or expanding your existing operation, you've probably noticed something unusual: the insurance requirements here are different from almost anywhere else. Texas doesn't mandate state-level licensing for painters, and it's the only state that doesn't require most private employers to carry workers' compensation insurance. But before you celebrate what sounds like regulatory freedom, here's the reality—most of your clients won't care what the state requires. They'll have their own insurance demands, and meeting them is the difference between landing contracts and losing bids.
This guide breaks down exactly what insurance coverage you need as a Texas painting contractor, what the law actually requires versus what clients expect, and how city-level regulations in Houston, Dallas, and Austin affect your business. Whether you're painting residential homes in the suburbs or handling commercial projects downtown, understanding these requirements will help you operate legally and competitively.
What Texas Law Actually Requires
Let's start with what Texas law mandates at the state level—which is surprisingly little. Texas doesn't require painters to hold a state license. Unlike electricians, plumbers, or HVAC technicians who must be licensed through the Texas Department of Licensing and Regulation (TDLR), painting contractors face no statewide credential requirements. You also won't find a state mandate requiring general liability insurance or workers' compensation for all painting businesses.
However, Texas does require all businesses to have a general business license to operate, and you'll need to register with the Texas Comptroller if you're operating as an LLC or corporation. If you hire employees, you'll also need to comply with federal and state tax withholding requirements. And here's a critical exception to the workers' comp rule: if you take on government contract work at any level—federal, state, or municipal—you must provide workers' compensation coverage for employees working on those projects.
If you choose to operate without workers' compensation insurance (which Texas allows through its unique "non-subscriber" system), you must file an annual notice with the Division of Workers' Compensation, post notices in your workplace, and inform new employees in writing that they're not covered. The trade-off? You lose the legal protection against most employee lawsuits. Without coverage, injured employees can sue you for damages including pain and suffering, which can result in significantly higher payouts than standard workers' comp claims.
City-Level Requirements: Houston, Dallas, and Austin
While the state keeps things loose, Texas cities take different approaches to regulating contractors. In Houston, you'll find the most lenient system—there's no general contractor registration requirement. The city handles permitting on a project-by-project basis, and most painting work (finish work like painting, papering, and tiling) doesn't even require a building permit. You can essentially start working once you've secured your clients and established your business entity.
Dallas takes a stricter approach. Before you can pull permits in Dallas, you must register through the Building Inspection Division. Registration requires a completed application, a $120 annual fee, and proof of three types of insurance: general liability, workers' compensation, and commercial auto insurance. Starting in May 2025, Dallas is transitioning to a new system called DallasNow that will handle permit applications, inspection scheduling, and registration renewals digitally, making the process more streamlined but no less rigorous.
Austin falls somewhere in the middle. General contractors must register with the Building and Trade Contractor Services (BTCS) department and the city's Development Services Department before pulling permits. Since the state doesn't require painting contractor licenses, you won't need to provide proof of a state credential, but you'll still need to complete the city registration process and comply with any insurance requirements the city sets for specific projects.
Insurance Coverage You Actually Need
Here's where the rubber meets the road: regardless of what Texas law requires, commercial clients, general contractors, and property managers will demand proof of insurance before signing contracts. The standard expectation is general liability insurance with $1 million per occurrence and $2 million aggregate limits. You'll routinely be asked to provide a Certificate of Insurance (COI) and add clients as additional insureds on your policy.
General liability insurance protects you when your work causes property damage or bodily injury. If a client trips over your paint supplies and breaks an ankle, or if you accidentally damage their hardwood floors with paint stripper, your general liability policy handles the claim. For Texas painting contractors, this coverage averages around $144 per month or approximately $1,733 annually, though your actual cost depends on your revenue, number of employees, and claims history.
Workers' compensation insurance, while optional under Texas law, becomes essential once you hire employees. The average cost in Texas is around $1,092 per employee annually, or roughly $231 per month. This coverage protects both you and your workers—it pays for medical bills and lost wages if an employee gets hurt on the job, and it shields you from lawsuits related to workplace injuries. Without it, you're personally liable if a worker falls off a ladder or develops respiratory issues from paint fumes.
Commercial auto insurance is another practical necessity if you use vehicles for your business. Texas requires minimum auto liability limits of $30,000 per person, $60,000 per accident, and $25,000 for property damage. But if you're transporting expensive equipment, supplies, or employees to job sites, you'll want higher limits plus coverage for your vehicle and cargo. Many painting contractors bundle this with their general liability through a Business Owner's Policy (BOP), which averages around $78 per month and provides more comprehensive protection.
Tools and equipment coverage is worth considering too, especially if you've invested in scaffolding, sprayers, or other specialized gear. For about $17 per month, you can protect your equipment from theft, damage, or loss. It's a small expense that prevents a major setback if someone breaks into your truck or you lose tools at a job site.
What's Changing: Proposed Legislation to Watch
The Texas Legislature is considering significant changes that could fundamentally alter the insurance landscape for painting contractors. Senate Bill 338 would require all building and construction contractors and subcontractors to provide workers' compensation insurance for their employees. If passed, this legislation would take effect September 1, 2025, giving contractors less than eight months to ensure compliance from the bill's passage.
The proposed enforcement mechanisms include daily fines for non-compliance, potential disqualification from contracts, and implications for business licenses. This would bring Texas in line with the other 49 states and eliminate the current "non-subscriber" option that allows contractors to operate without workers' comp coverage. If you currently operate without workers' compensation, now is the time to budget for this potential change and get quotes from insurers so you're not scrambling if the bill passes.
How to Get Started and Stay Compliant
Setting up your insurance properly from the start saves headaches down the road. Begin by getting quotes from multiple insurance carriers who specialize in contractor coverage. Look for agents who understand the painting industry specifically—they'll know what coverage limits clients typically require and can help you avoid gaps that could leave you exposed.
If you're working in Dallas, complete your contractor registration with the Building Inspection Division before bidding on projects that require permits. Have your insurance policies in place first, because you'll need to provide proof of coverage with your registration application. For Austin work, register with both the BTCS and Development Services Department. Even in Houston where registration isn't required, maintain your insurance and keep current Certificates of Insurance ready to provide to clients on request.
Review your coverage annually as your business grows. What works for a solo painter doing residential repaints won't be adequate once you're running a crew on commercial jobs. As your revenue increases and you take on larger projects, your insurance limits should increase proportionally. And keep detailed records of your coverage—clients may ask for proof of insurance from jobs you completed years ago, especially if issues arise during warranty periods.
Texas gives painting contractors more flexibility than most states when it comes to licensing and insurance requirements, but that freedom comes with responsibility. Your clients, not the state, will ultimately determine what coverage you need to stay competitive. Getting the right insurance isn't just about compliance—it's about protecting the business you've built and positioning yourself to win better contracts. Take the time to get it right, and you'll spend less time worrying about liability and more time growing your business.
