Here's something that catches most new retail store owners off guard: Texas doesn't require much business insurance at all. You could technically open a boutique, gift shop, or convenience store without carrying a single insurance policy. But here's the thing—just because you can doesn't mean you should. Your landlord will almost certainly require coverage before handing over the keys, and one slip-and-fall incident could wipe out everything you've built.
Let's break down what Texas actually requires for retail stores, what your lease will probably demand, and what coverage makes sense based on how retail businesses actually get sued.
What Texas Law Actually Requires
Texas takes a hands-off approach to business insurance. Unlike California or New York, which mandate various coverages, Texas law is surprisingly minimal. The state doesn't require general liability insurance, business property insurance, or even workers' compensation for most private employers.
The only hard requirement is commercial auto insurance if you use vehicles for your business. If you have a delivery van or company car, you'll need to carry liability coverage. Beyond that, Texas law gives you flexibility to decide what makes sense for your operation.
But here's where it gets interesting: even though workers' comp isn't required, choosing not to carry it comes with serious strings attached. You have to file Form DWC-005 with the state every year between February 1 and April 30, post notices in your store telling employees they're not covered, and report any workplace injuries that result in more than one day of lost time. More importantly, you lose the legal shield that workers' comp provides. If an employee gets hurt and sues you, you can't use the standard legal defenses that workers' comp normally gives employers.
What Your Landlord Will Actually Require
This is where theory meets reality. While Texas doesn't mandate general liability insurance, virtually every commercial lease does. Your landlord doesn't want to get dragged into a lawsuit if a customer trips over a display rack in your store, so they'll require you to carry general liability coverage—usually with them named as an additional insured.
Most commercial leases in Texas require at least $1 million in general liability coverage per occurrence, with a $2 million aggregate limit. Some shopping centers or upscale retail districts might push for higher limits. The good news? For most small retail operations in Texas, this coverage averages around $104 per month—about $1,248 annually. If you're a sole proprietor with a smaller footprint, you might pay closer to $76 per month.
General liability covers the scenarios that keep retail owners up at night: a customer slips on a wet floor and breaks their hip, a shelf collapses and damages someone's property, or a customer claims your employee made a defamatory statement. This is your financial backstop against third-party lawsuits for bodily injury, property damage, and personal injury.
The Workers' Comp Decision for Retail
Texas is unique—it's the only state where workers' compensation is optional for private employers. This creates a genuine decision point for retail store owners. About half of retail businesses in Texas choose not to carry workers' comp coverage.
Here's what you need to understand about going without it: workers' comp exists to protect both employees and employers. When you have it, employees get guaranteed medical coverage and lost wage benefits if they're hurt on the job. In exchange, they generally can't sue you. It's a trade-off that's been baked into American labor law for over a century.
When you skip workers' comp in Texas, that protection evaporates. An employee who gets injured can sue you directly, and you lose the legal defenses that normally limit employer liability. For a retail operation—where employees are constantly lifting boxes, operating equipment, climbing ladders to restock shelves, and dealing with slip hazards—this is a real risk.
There's one exception you need to know: if you take on any government contracts, you must provide workers' comp coverage for employees working on those projects. This is non-negotiable, even in Texas.
Business Owner's Policy: The Smart Package Deal
Most retail stores in Texas benefit from bundling general liability with commercial property coverage into what's called a Business Owner's Policy, or BOP. This package typically costs less than buying the coverages separately and addresses both your liability exposure and your physical assets.
The property portion covers your inventory, fixtures, equipment, and improvements you've made to the space. If a fire destroys your store, a pipe bursts and ruins your merchandise, or theft wipes out your cash register and computers, property coverage handles the replacement costs. For many retail operations, this is just as critical as liability protection.
A BOP also typically includes business interruption coverage, which pays for lost income if you have to temporarily close due to covered damage. This can be a lifeline if a storm damages your storefront and you need to shut down for repairs while still paying rent and other fixed costs.
Recent Changes: What's New for 2025-2026
The Texas Legislature passed significant insurance reforms in 2025 that took effect starting January 1, 2026. While these changes primarily impact personal lines insurance, there are a few things retail business owners should know.
First, insurers are now prohibited from requiring you to bundle home and auto policies together. This matters because many retail business owners also have personal insurance needs, and you now have more flexibility in shopping those policies separately without penalty.
Second, insurance companies must now update your credit information every three years when determining rates. Previously, some insurers would pull your credit once and never update it—even if your credit improved significantly. This change ensures your rates reflect your current financial picture.
How to Actually Get Coverage
Start by understanding what your lease requires. Get that information in writing from your landlord before you start shopping, so you know exactly what coverage limits and endorsements you need. Then compare quotes from at least three insurance providers.
Be honest and thorough when describing your operations. If you serve food, sell certain high-risk products, or have unique features like a workshop area, disclose that upfront. Failing to accurately describe your business can lead to denied claims down the road.
The bottom line? Texas gives you flexibility, but that doesn't mean you should skip coverage. Most retail stores benefit from a solid BOP that includes general liability and property coverage, and seriously consider workers' comp if you have employees. The modest monthly premium is a lot easier to swallow than a six-figure lawsuit or having to replace your entire inventory out of pocket after a disaster.
