Texas Business Insurance: What You Need to Know

Texas Business Insurance: What You Need to Know

Texas Business Insurance: What You Need to Know
Charles Munyi
Jun 15, 2022
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Running a business is fraught with risk. Accidents, natural disasters, and theft might occur when you least expect it. 

For example, a burglar may break into your premises and vandalize equipment, forcing you to close for repairs. Without insurance, unexpected costs and liability claims can cause a significant financial impact on your business. 

Texas business insurance can provide coverage to cope with these risk scenarios.

What is Texas Business Insurance?

Insurance is a form of risk management for business owners and coverage for your business is a prudent way of protecting your business assets.

Business insurance is a type of insurance policy to protect a business against potential risks. These policies cover your company against lawsuits, property damage, theft and burglary, employee injury, and loss of income.

A business should assess its risks and purchase the appropriate type of insurance. General liability insurance protects against third-party property damage and injury, medical expenses, and legal costs. Commercial property insurance helps to compensate for property losses arising from accidents, thefts, and natural disasters.

Legal and compensation costs can be punitive, and Texas business insurance can help reduce out-of-pocket payments, saving your business from financial strain.

Clients may also require that you have business insurance to protect them against third-party injury or property damage arising from your work.

Who Needs General Liability Insurance?

Business owners and individual contractors need general liability insurance. For small business owners, it's crucial to cover your premises, property, and employees. 

Contractors who work on client job sites face property damage and third-party bodily injury claims. Contractors, such as plumbers, electricians, landscapers, and bricklayers can use liability insurance to pay for defense costs and damages.

General liability insurance covers third-party risks related to personal injury, property damage, product liability, and advertising injury.

  • Bodily Injury: General liability insurance covers bodily injuries for third parties such as customers and visitors. For example, a customer may trip on work tools breaking their leg. In this case, liability insurance may settle the hospital bills, rehabilitation, lost wages, and settlements from a lawsuit.
  • Property Damage: If you destroy another person's property, you are liable for damages. A general liability policy may cover repairs and court settlements for third-party property damage.
  • Personal and advertising injury: Liability insurance covers malicious prosecution, slander and libel, copyright infringement in advertising, and privacy violation.

Types of Texas Business Insurance

Additional policy options are vital to protect your business from potential losses. The following types of insurance can add extra coverage for your business.

Business Owners Insurance

BOP insurance merges liability and property coverage into one package including general liability and commercial property insurance. Liability covers third-party risks, such as property damage, bodily injury, product liability, and advertising injury. Property covers business personal property and commercial buildings against theft, fires, and weather-related calamities.

Commercial Auto Insurance

Texas law requires a business that owns vehicles to have auto insurance. Commercial auto insurance covers business vehicles such as cars, vans, and trucks against damage and suits. Vehicle insurance may pay for medical bills, property damage, and legal expenses if your business vehicle is involved in an accident.

Workers’ Compensation Insurance

Employees may suffer physical injuries due to accidents or working under strenuous conditions. Though workers' compensation insurance is not mandatory in Texas, you might need it to pay for employees' medical bills, lost wages, and related lawsuits.

Business Income Insurance (a coverage afforded by Commercial Property Insurance)

Natural disasters, such as tornadoes, burglary, and fires, can force you to close your business. Before resuming normal operations, you may need to repair your building or purchase operating equipment. In such circumstances, insurance may replace your lost income and pay for operating expenses.

Professional Negligence Insurance

This insurance is important for service-providing professions, such as accountants, architects, and real estate agents. If you have professional liability coverage, and a customer sues for poor or incomplete work, wrongful advice, misrepresentation, or negligence, it may cover legal costs and court awards.

Texas Business Insurance Coverage and Requirements

Business insurance helps businesses avoid unexpected costs. Typically, it covers business losses and third-party risks that may arise. Business owners should consider insurance to cover the following risks.

Property Damage: General liability insurance covers third-party property damage and rented premises damage. Third parties such as landlords and customers might sue for property damage. For example, your driver backs up the business truck into the wall of a rented warehouse. Liability insurance can pay for the repairs and potential lawsuits.

Third-Party Injury: A customer, client, or passerby’s injury may bring about medical bills, attorneys fees, lost wages, and court settlements. General liability may cover these expenses.

Product Liability: A customer can sue for harm caused by a product you manufacture, distribute, or sell. For instance, a cleaning product you sell causes an allergic reaction resulting in hospitalization. Product liability insurance may cover attorney fees and court settlements.

Business Property Damage: If a fire, burglary, or storm destroys your business assets, commercial property insurance may pay to replace and repair business assets.

Employee Injury: Employee insurance covers staff and individual contractors for work-related injuries and deaths. It covers medical payments, lost income, lawsuit costs, and death benefits.

Vehicle Accidents: Commercial auto insurance covers collisions, pedestrian accidents, and wreckage expenses. Your insurance provider will pay third-party vehicle repairs, pedestrian compensation, lawsuit costs, and business vehicle repair expenses.

Court Settlements for Negligence: A client may seek restoration for damage from your substandard work or advice. Professional negligence insurance will cover legal expenses.

Policy Exclusions

Standard policies exclude certain risks from coverage. General liability insurance excludes willful negligence and intentional copyright infringement from coverage. It exempts intentional acts that lead to property damage. Also, standard general liability policies exclude pollutant damage.

Commercial property insurance does not cover all-natural disasters, so you should request additional riders to add protection against earthquakes and tornadoes.

How Much Does Texas Business Insurance Cost?

The average cost of general liability insurance for a small business is $50 per month. Since insurance providers use different models to rate risks, prices may vary from one insurer to another. 

Also, premiums depend on your specific coverage. As you add insurance riders and increase coverage limits, your insurance costs may increase. In practice, some insurance companies bundle several coverages into one business owner’s policy, lowering insurance costs. The following factors influence your insurance cost:

  • Location: Where your business operates affects the premium paid. Is it in an urban or rural area? Factors such as crime rates influence insurance costs.
  • Deductible: A deductible is an amount you have agreed to pay out of pocket on a policy, and premiums are lower if your deductible is higher.
  • Industry: Some sectors such as oil and gas involve complex operating activities that increase risks. An employee on an oil rig has a higher chance of accidents than an accountant. Therefore, these high-risk sectors will have higher premium costs.

Policy limits depend on coverage. Standard limits are up to $1 million for a single claim and an aggregate of $2 million for a single policy period, usually twelve months.

Get Texas Business Insurance

Texas business insurance will cover your business assets and protect against third-party claims. Contact your insurance agent and ask them to get you a Pathpoint quote today.

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