Here's what catches most new real estate agents in Texas off guard: the state doesn't actually require you to carry insurance. No mandatory E&O policy. No workers' comp requirement. No general liability mandate. Texas is one of the most hands-off states when it comes to insurance regulation for real estate professionals. But here's the catch—just because the state doesn't require it doesn't mean you can skip it. Your brokerage will almost certainly require coverage, and so will most of your clients. Let's break down exactly what insurance you need as a Texas real estate agent, what you can skip, and how much it'll actually cost you.
What the Texas Real Estate Commission Actually Requires
The Texas Real Estate Commission (TREC) keeps it simple for individual agents and brokers—there's no mandatory insurance requirement for your license. Unlike some states that won't let you practice without proof of E&O coverage, Texas lets you operate without it. But there's an important exception: if you're a business entity broker where the designated broker owns less than 10% of the company, TREC requires you to maintain at least $1 million per occurrence in errors and omissions insurance. You'll need to file a Certificate of Insurance with TREC both when you first get licensed and every time you renew.
This ownership threshold matters. If you're the designated broker and you own 10% or more of your brokerage, you can skip the mandatory E&O requirement. Own less than that? You'll need to provide proof of that $1 million policy to TREC. This rule exists to protect clients when the person running the brokerage doesn't have significant skin in the game.
Errors and Omissions Insurance: Not Required, But Essential
Even though TREC doesn't require E&O insurance for individual agents, the practical reality is different. Most brokerages won't let you join their team without it. Why? Because E&O insurance protects you—and them—from the financial devastation of a professional liability lawsuit. Miss a deadline on a contract addendum? Fail to disclose a known property defect? Accidentally give advice that crosses into legal territory? Any of these mistakes could result in a lawsuit demanding six figures in damages.
E&O insurance covers your legal defense costs and any settlements or judgments up to your policy limits. The average cost for real estate professionals in Texas is about $55 per month, or around $665 annually. That's less than most agents spend on their monthly phone bill, and it protects your entire career. Coverage typically starts at $100,000 per claim, but many agents opt for $500,000 or $1 million limits to match what clients and contracts expect.
Workers' Compensation: The Texas Exception
Texas is the only state in the country that doesn't require businesses to carry workers' compensation insurance. That includes real estate agencies and brokerages. If you're a solo agent working as an independent contractor, workers' comp isn't on your radar. But if you run a brokerage with employees—administrative staff, buyer's agents, transaction coordinators—you need to think carefully about this coverage even though it's optional.
Without workers' comp, you could be personally liable if an employee gets hurt on the job. Imagine an assistant slips while setting up an open house and breaks their wrist. Without workers' comp, they could sue you directly for medical bills, lost wages, and pain and suffering. A workers' comp policy covers those costs and provides disability benefits, all while limiting your liability. Most brokerage owners still choose to buy this coverage specifically to avoid that risk, even though Texas law doesn't force them to.
General Liability Insurance and Contract Requirements
General liability insurance covers third-party accidents and injuries that happen during your business operations. Think about all the open houses you host, the property showings you conduct, the office space you lease. If a prospective buyer trips on a loose carpet during a showing and breaks their ankle, general liability covers their medical bills and your legal costs if they sue. The average cost for real estate agents in Texas is just $33 per month—about $400 annually—for solid coverage.
While Texas doesn't legally require general liability insurance, your contracts often will. Commercial landlords typically require proof of general liability before you can sign an office lease. Lenders might ask for it when you're applying for a business loan. High-value clients sometimes require agents to carry a minimum amount of coverage before they'll sign a buyer representation agreement. The state gives you a pass, but the business world doesn't.
How Much You'll Actually Pay for Coverage
Let's talk real numbers. Most Texas real estate agents pay around $72 per month for comprehensive business insurance coverage, though this can range from $26 to $91 depending on your transaction volume, revenue, and claims history. If you're just starting out with a clean record and modest income, you'll pay less. Experienced agents closing $5 million in sales annually with a prior claim on their record will pay more.
Here's how it typically breaks down: general liability averages $33 per month, E&O runs about $55 per month, and if you're a broker with employees who opts for workers' comp, that varies widely based on payroll and job classifications. The key insight? Comprehensive protection for your real estate business costs less than most agents spend on marketing in a single month. It's one of the smartest investments you can make to protect the business you're building.
Getting Started with Insurance as a Texas Real Estate Agent
Before you join a brokerage or take on your first client, have a conversation with your sponsoring broker about their insurance requirements. Many brokerages offer group E&O policies that cover all their agents, while others require you to purchase your own individual policy. Get clarity on what you need before your first transaction closes.
When you're ready to buy coverage, compare quotes from multiple insurers that specialize in real estate professional insurance. Look beyond just the premium—check what's actually covered, what the deductibles are, whether you get tail coverage (which protects you from claims filed after your policy ends), and how the claims process works. The cheapest policy isn't always the best deal if it leaves gaps in your coverage. You're protecting your career, your income, and your financial future. Texas may not require insurance, but your success depends on having the right protection in place.
