Contractor Insurance Requirements in Texas

Texas construction contracts spell out which insurance a contractor must carry, at what limits and with which endorsements. This guide walks through a typical contract insurance section, from general liability endorsements to builder's risk and bonds, so you can read it before you bid.

What Texas construction contracts typically require

Texas construction contracts typically require contractors to carry commercial general liability, commercial auto, workers compensation and umbrella or excess liability, with stated minimum limits and specific endorsements. Many contracts also address builder's risk, performance and payment bonds, and the certificates and policy documents the contractor must deliver before work starts.

The insurance section, or an insurance exhibit, commonly asks for:

• Commercial general liability with occurrence and aggregate limits, sometimes per project.
• Additional insured status for ongoing and completed operations.
• Primary and noncontributory wording and a waiver of subrogation.
• Umbrella or excess liability above the primary policies.
• Workers compensation and employer's liability.
• Commercial auto liability, often including hired and non-owned autos.
• A builder's risk clause and any required bonds.

For the full contractor program these requirements sit on, see contractors and construction insurance.

General liability limits and aggregates, including per-project aggregates

Contractor general liability requirements usually specify a per-occurrence limit, a general aggregate and a products-completed operations aggregate. Many contracts also require the general aggregate to apply per project, so that claims on another job cannot use up the limit available on this one. A per-project aggregate is added by endorsement.

A standard general liability policy has one general aggregate shared across every job. A contractor running several projects can see that aggregate eroded by losses elsewhere. A per-project aggregate endorsement gives each designated project its own aggregate, subject to the policy's terms. Contracts may also say how long completed operations coverage must continue after the work ends. The general liability insurance glossary defines each limit.

Additional insured endorsements: ongoing and completed operations

An additional insured endorsement extends a contractor's general liability policy to protect another party, such as the owner or general contractor, for liability arising out of the contractor's work. Contracts usually require coverage for both ongoing operations, while work is being performed, and completed operations, after the work is finished and turned over.

Two standard ISO forms appear in many contracts: CG 20 10 for ongoing operations and CG 20 37 for completed operations. Some contracts name a specific edition of each form, some accept "equivalent" forms, and some accept blanket endorsements that apply when a written contract requires them.

The exact form named matters because forms and editions differ. An edition can change whether coverage is limited to liability caused by the named insured's acts, whether completed operations are included, and whether coverage is capped at what the contract requires. If the policy carries a different form than the contract names, the contractor may be in breach even though an endorsement exists.

What primary and noncontributory means in plain English

Primary and noncontributory wording means the contractor's policy responds first for the additional insured, and the additional insured's own insurance is not asked to share the loss. In plain English, the contractor's insurer pays before the owner's or general contractor's insurer, without seeking contribution from them, subject to the policy's terms.

Without this wording, a loss may be split among insurers under their "other insurance" clauses, pushing claims onto the owner's or general contractor's own policy. Primary and noncontributory status is created by endorsement or by policy language tied to a written contract. Some contracts require it on the umbrella too.

Waiver of subrogation and where it is required

A waiver of subrogation is an agreement that the contractor's insurer will not pursue recovery from another party, such as the owner or general contractor, after paying a claim. Construction contracts commonly require a waiver of subrogation on general liability, commercial auto, workers compensation and umbrella or excess policies.

Each policy needs its own waiver; a waiver on general liability does nothing for workers compensation. In Texas, workers compensation waivers are added by a state-specific endorsement, and some policies may charge additional premium for them.

Texas limits on additional insured and indemnity obligations

Texas Insurance Code Chapter 151 generally limits construction contract provisions that require one party to indemnify another, or to provide additional insured coverage to another, for that other party's own negligence or fault. The statute contains exceptions, and how it applies depends on the specific contract and facts. Have counsel review the contract.

Some indemnity and additional insured language in contract forms from other states may not be enforceable as written in Texas. That does not mean a contractor can ignore the insurance section. 4J Insurance Brokerage can explain what your endorsements appear to provide, but the contract and your attorney govern what is required and enforceable.

Umbrella and excess limits sized to the contract

Umbrella and excess liability policies add limits above a contractor's general liability, auto and employer's liability policies. Contracts often set the total limit the contractor must carry, and the umbrella or excess layer is usually how a contractor reaches that number without buying very high primary limits.

Size the umbrella to the highest total limit across current and expected contracts. Then check follow-form considerations: whether the umbrella follows the underlying additional insured, primary and noncontributory and waiver terms, or applies narrower wording of its own.

Workers compensation and Texas nonsubscription

Workers compensation requirements in Texas construction contracts usually call for a workers compensation policy and employer's liability limits, often with a waiver of subrogation. Texas generally allows private employers to choose not to carry workers compensation, known as nonsubscription, but many construction contracts require coverage regardless.

A nonsubscribing contractor may be unable to meet contract requirements, may face restrictions on public work, and carries uninsured exposure for workplace injuries. Contracts with Texas governmental entities generally require workers compensation coverage for people working on the project. Review your contracts with your attorney before choosing nonsubscription.

Commercial auto requirements

Commercial auto requirements in construction contracts usually call for liability coverage on owned, hired and non-owned autos at a stated limit, with additional insured status and a waiver of subrogation in favor of the owner or general contractor. A policy that covers only scheduled vehicles may not meet a contract requiring "any auto" coverage.

The builder's risk clause in a construction contract

A builder's risk clause states who must buy property insurance on the work under construction, for what value and for whose benefit. Depending on the contract, the owner or the general contractor may be responsible for buying builder's risk, and subcontractors may be included as insureds. AIA-style general conditions commonly address this property insurance.

The clause often sets the insured value, the parties included and who bears deductibles. Builder's risk is property insurance, so it does not satisfy any liability requirement. See the builder's risk insurance in Texas guide, and for the contractor's side of the clause, builder's risk for general contractors.

Bid, performance and payment bonds

Bonds in a construction contract are surety obligations, not insurance for the contractor. A bid bond supports the contractor's promise to sign the contract if awarded. Performance and payment bonds back the contractor's obligations to complete the work and pay subcontractors and suppliers. Texas public work above statutory thresholds generally requires performance and payment bonds.

A bond is credit, so bonding capacity should be lined up before you bid. See Texas surety bonds and the Texas public work bid bond requirements in 2026 post.

Certificates of insurance: a certificate is not coverage

A certificate of insurance is a summary of a contractor's policies on a given date. A certificate of insurance does not create coverage, add an additional insured or change a policy. Additional insured status, primary and noncontributory wording and waivers of subrogation must actually be endorsed onto the policy.

Owners and general contractors increasingly ask for copies of the endorsements themselves. If a certificate describes coverage the policy does not provide, the policy terms control.

Pre-bid contract insurance review checklist

A pre-bid contract insurance review compares a contract's insurance section to the contractor's actual policies before the bid goes in, so gaps can be closed or priced in. Work through these steps on every contract:

1. Read the insurance section, any insurance exhibit and the general conditions in full.
2. List every required limit, including any per-project aggregate.
3. Note the additional insured forms and editions named, and how long completed operations coverage must last.
4. Confirm primary and noncontributory wording and waivers of subrogation on each policy named.
5. Confirm the umbrella or excess policy follows form where required.
6. Confirm workers compensation and auto coverage match the contract wording.
7. Identify who must buy builder's risk and for what value.
8. Confirm bond requirements and your available bonding capacity.
9. Have counsel review the indemnity and additional insured provisions, including Chapter 151.
10. Send the insurance section to your broker before you bid, not after award.

4J Insurance Brokerage reviews contract insurance requirements against contractors' existing policies. For a broader look at your program, start with a coverage audit or the contractors and construction insurance page. Project property questions belong with the builder's risk guide, and bonding questions with Texas surety bonds.

Frequently asked questions

What insurance does a contractor need in Texas?

The insurance a contractor needs in Texas is usually set by its contracts. Most require commercial general liability, commercial auto, workers compensation and umbrella or excess liability, with stated limits and endorsements. Some also require builder's risk and bonds. The contract and your attorney govern.

What is an additional insured endorsement?

An additional insured endorsement adds another party, such as an owner or general contractor, to a contractor's liability policy for liability arising from the contractor's work. Coverage depends on the endorsement form.

What is the difference between CG 20 10 and CG 20 37?

CG 20 10 is the standard ISO additional insured form for ongoing operations. CG 20 37 is the standard ISO additional insured form for completed operations. Contracts often require both, sometimes in specific editions.

What does primary and noncontributory mean?

Primary and noncontributory means the contractor's policy pays first for the additional insured, and the additional insured's own insurance is not asked to contribute, subject to the policy's terms.

Is a waiver of subrogation required on workers compensation?

Many Texas construction contracts require a waiver of subrogation on workers compensation as well as on general liability, auto and umbrella policies. Each policy needs its own waiver.

Does a certificate of insurance prove I am covered as an additional insured?

No. A certificate of insurance summarizes coverage but does not create it. Additional insured status exists only if the policy carries an endorsement that provides it.

Can Texas contracts require a contractor to cover another party's negligence?

Texas Insurance Code Chapter 151 generally limits construction contract provisions requiring a contractor to indemnify, or provide additional insured coverage to, another party for that party's own negligence. Exceptions exist, so have counsel review the contract.

This page is general information, not a quote, a coverage opinion or legal advice. Coverage, eligibility and pricing depend on underwriting and on the terms, conditions and exclusions of the policy issued. Market appetite changes; examples reflect 4J's understanding as of September 2026. 4J Insurance Brokerage is a broker and does not underwrite risk or issue policies.