Best Small Business Insurance in Texas

Texas Insurance Requirements

The only insurance that the State of Texas requires that most businesses carry is commercial auto insurance on any vehicles that they own and are registered to be operated on the road.

Unlike other states, Texas does not require private employers to carry workers’ compensation insurance, general liability insurance, or other types of business insurance, although they are highly recommended.

Commercial Auto Insurance

The State of Texas requires that all vehicles owned and registered within the state must carry auto insurance. According to the Texas Transportation Code Section 601.053:

(a) As a condition of operating in this state a motor vehicle to which Section 601.051 applies, the operator of the vehicle on request shall provide to a peace officer, as defined by Article 2.12, Code of Criminal Procedure, or a person involved in an accident with the operator evidence of financial responsibility by exhibiting:

(1) a motor vehicle liability insurance policy covering the vehicle that satisfies Subchapter D or a photocopy of the policy;

(2) a standard proof of motor vehicle liability insurance form prescribed by the Texas Department of Insurance under Section 601.081 and issued by a liability insurer for the motor vehicle;

(2-a) an image displayed on a wireless communication device that includes the information required by Section 601.081 as provided by a liability insurer;

(3) an insurance binder that confirms the operator is in compliance with this chapter;

(4) a surety bond certificate issued under Section 601.121;

(5) a certificate of a deposit with the comptroller covering the vehicle issued under Section 601.122;

(6) a copy of a certificate of a deposit with the appropriate county judge covering the vehicle issued under Section 601.123; or

(7) a certificate of self-insurance covering the vehicle issued under Section 601.124 or a photocopy of the certificate.

Vehicles are required to have a minimum of $30,000 per person, up to $60,000 per accident, as well as $25,000 in property damage coverage- or 30/60/25 coverage according to Texas Transportation Code Section 601.072.

(a-1) Effective January 1, 2011, the minimum amounts of motor vehicle liability insurance coverage required to establish financial responsibility under this chapter are:

(1) $30,000 for bodily injury to or death of one person in one accident;

(2) $60,000 for bodily injury to or death of two or more persons in one accident, subject to the amount provided by Subdivision (1) for bodily injury to or death of one of the persons; and

(3) $25,000 for damage to or destruction of property of others in one accident.

Data Breach Insurance

Texas’ Data Breach Notification law requires a business whose computer systems have been breached so that personal information has been put at risk to notify the affected individuals. The Texas Attorney-General must be notified as well, if the data of 250 or more individuals are affected by the breach. Moreover, the Attorney-General’s Office must create a public listing on its official website of any data breaches that have been reported.

§ 521.053: Notification Required Following Breach of Security of Computerized Data

(b) A person who conducts business in this state and owns or licenses computerized data that includes sensitive personal information shall disclose any breach of system security, after discovering or receiving notification of the breach, to any individual whose sensitive personal information was, or is reasonably believed to have been, acquired by an unauthorized person.

(c) Any person who maintains computerized data that includes sensitive personal information not owned by the person shall notify the owner or license holder of the information of any breach of system security immediately after discovering the breach, if the sensitive personal information was, or is reasonably believed to have been, acquired by an unauthorized person.

This obligation to disclose data breaches increases the likelihood that a Texas business will face legal action from individuals whose data have been put at risk. Such an eventuality will adversely affect finances, even where the business defends itself successfully, which it will be able to do if it has taken reasonable precautions to secure the data; legal fees will still need to be paid. A business that loses its case may be liable for damages and face ruinous financial consequences. 

Accordingly, Texas businesses should consider carrying data breach insurance to guard against such developments.

Texas Insurance Resources

Texas Department of Insurance
Texas Workforce Commission
Texas Insurance Resources for Businesses
Texas Automobile Insurance Guide
Texas Workers’ Compensation

General Liability Insurance

The vast majority of Texas companies purchase general liability insurance from an insurance company even though it is not legally required. This type of business liability insurance covers third-party bodily injury, third-party property damage, advertising liability, libel, slander, copyright issue, and other common claims faced by companies across various industries. 

General liability insurance is one of the most important types of business insurance your company can purchase.

Business Owner’s Policy

A business owner’s policy (BOP) is an affordable way to bundle business insurance coverages. This type of policy includes commercial general liability insurance with commercial business property insurance. Many small business owners with a physical business space opt for this coverage.

Commercial Auto Insurance

You need to carry commercial auto insurance if your company uses vehicles to transport people or goods. This type of insurance is very similar to personal auto insurance and covers liability, medical costs, collisions, and uninsured/underinsured motorists. A commercial auto policy also covers vehicles rented or owned by your company and employees who use their own vehicles for company business.

Workers’ Compensation Insurance

Texas does not require businesses to carry workers’ compensation insurance. Taking out workers' compensation insurance puts a limit on the amount and type of compensation that an injured employee may receive. The limits are set by law.

Employee Health/Life/Disability Insurance

Companies that provide health, life, and/or disability insurance as a fringe benefit will need appropriate Texas insurance. Under the Affordable Care Act, firms with more than 50 full-time employees must offer health insurance or pay an expensive penalty.

Professional Liability Insurance

Professional liability insurance covers financial risks to attorneys, accountants, and other people who provide professional services or expertise. Professional liability coverage varies depending on the industry but usually includes negligence, legal defense, slander or libel, and copyright and trademark disputes. 

Professional liability insurance includes errors and omissions (E&O) insurance.

Data Breach Insurance

If your company hosts customers’ personal information on its servers and those servers are hacked, lawsuits and damages can result. Data breach insurance protects you in these cases. 

Cyber Liability Insurance

Similar to but more comprehensive than data breach insurance, cyber liability insurance may pay for legal expenses related to a data breach or set up a call center for individuals affected by a breach. It also may pay for active protection against cyberattacks.

Commercial Crime Insurance

Crimes like extortion, forgery, burglary, computer fraud, and embezzlement are covered by commercial crime insurance. Situations in which this type of insurance is particularly useful include dishonest or libelous acts by employees.

Fiduciary Liability Insurance

Fiduciaries, who are legally required to act in plan participants’ best interests rather than the company’s when choosing advisors and investments, should consider this type of insurance coverage. It covers them if they are sued for allegedly providing negligent investment advice or administering plans or benefits incorrectly. 

Third parties like out-of-company consultants and benefit plan administrators are usually not protected.

Directors and Officers Insurance

Any company with directors and officers should consider directors and officers (D&O) insurance coverage, a type of liability insurance that reimburses directors and officers for claims made against them regarding harm allegedly caused by their management decisions.

Executive Risk Coverage

Executive risk insurance is business liability insurance that provides coverage for fraud, D&O, employment practices, initial public offerings, pension funds, extortion, and professional negligence.