Liability Insurance In Texas: Why You Need Liability Insurance For Texas Business-Owners
Liability insurance provides insurance in the event of lawsuits and damages caused by your business. In the state of Texas, commercial liability insurance can be purchased for all businesses from small start-ups to large enterprises. Liability insurance can protect you against lawsuits if someone gets injured at your business premises or an employee causes damage and the other person presses charges.
- Commercial liability insurance is your business’s legal responsibility to 3rd party businesses and clients.
Liability insurance will cover your legal fees and reimburse the other person for the damage you caused. There are separate liability insurance plans for low-risk, medium-risk, and high-risk businesses and you can purchase the exact coverage you need. In Texas, commercial liability insurance is not required by law, but it’s recommended to stay on the safe side.
Liability Insurance: For TX-Based Businesses
Texas has the largest road network of all states in the union, surpassing even California. This is why liability insurance is essential to keep your vehicle fleet safe on the roads. If you have a fleet of delivery vehicles such as vans, trucks, and motorcycles you can insure them on the road using commercial liability insurance. It’s legally mandatory that all business vehicles possess commercial liability insurance.
If you expand your business to a new building and want to insure the building, you can combine your “Business Owner’s Policy” with a broad commercial insurance plan that will protect the building and provide coverage against lawsuits. The coverage amounts can easily exceed a million dollars.
How Does Liability Insurance Work?
Liability insurance will protect you in the event you become the subject of a lawsuit in which you have to compensate for another party. The insurance company will bear the cost of your legal fees as well as the damage caused to the other business or person. In this type of insurance, you don’t get anything but the other person does.
What Does TX Liability Insurance Cover?
Texas commercial liability insurance covers you for all damages you’ve caused to another person such as their property damage, personal injuries, and revenue loss. It does not, however, cover you for your own damages. If your employees are hurt during the accident or if your business equipment is damaged, you have to have separate BOP insurance. Liability insurance only extends to 3rd party persons involved in the lawsuit. In this case, your business and the employees are the 1st party.
NOTE: You’ll only need liability insurance your business or employees are at fault. If you’re not at fault in an accident, you won’t have to file a claim with your commercial liability insurance company.
- Property Damage. For business owners, this refers to the sum of the damages caused. If your employees manage a partner’s business equipment and damage it, they are entitled to damages. In automotive commercial insurance, this also extends to public property such as telephone poles, buildings, fences, lamp posts, etc, that employee drivers might hit by accident.
- Advertising. If your marketing team slanders a business competitor in an advertising campaign and they end up with a loss of revenue, they could sue you for the damages. The commercial liability policy covers you in this type of lawsuit.
- Intellectual Property. If a company sues you for Copyright Infringement or intellectual property theft, you’ll have the coverage necessary to defend yourself. If one of your employees steals a product design and doesn’t inform you about it, you still have to defend yourself in the court of law.
- Medical Expenses. Liability insurance covers all medical and rehabilitation expenses for people your business or employees caused injury to. If your employee causes an accident and the other person lands in a hospital, liability insurance has them covered for their medical expenses.
Pro Tip: Purchase more coverage than you need. If you cause an accident, you could get sued for large sums of money in Texas. This is why despite no minimal requirements, consider raising the limits on your commercial liability insurance. Call up your insurer and tell them you want to raise the liability insurance on your plan to keep your business safe.
How Much Liability Insurance Do I Need In Texas?
In Texas, there are no minimum coverage amounts required for commercial liability insurance. However, even if your business coverage surpasses $1M dollars, the annual premiums can remain low. The state of Texas does not impose minimum liability coverage for businesses. In fact, it’s not required to have it at all.
Most businesses in TX have liability insurance to protect their business assets. While a small business may only require $500K-1M in total coverage, a large company may require more than $10M in coverage. The insurance company will offer protection for multiple lawsuits per year and cap the total amount you’re entitled to per lawsuit. Example: If you have $4M in coverage, you may be entitled to $1M per lawsuit.
There are a few legal requirements for commercial liability coverage. For instance, it’s mandatory to have commercial liability insurance for business vehicles if you possess company vehicles and wish to register them. In the vehicle category, the same requirements apply to the public as they do to business transport vehicles. Example: Trucks may need $1M in insurance if they’re carrying non-lethal materials while trucks carrying hazardous materials might require $5M in insurance coverage.
How To Get Liability Insurance In Texas?
In Texas, the liability insurance coverage works similarly to the rest of the country except for the mandatory coverage. It’s possible to purchase separate liability insurance on your existing Business Owner’s Policy to get extra coverage. However, BOP bundles automatically include liability insurance in your existing plan. Consult your insurance company to find out if you have liability insurance under your BOP plan or you have to purchase additional liability insurance.
Is Liability Insurance Texas Different?
Commercial liability insurance in Texas offers the same protections as other liability insurance plans in the rest of the nation. While Texas is a very business-friendly state and frivolous lawsuits are minimal, all self-employed contractors and businesses still need protection because accidents happen.
Commercial liability insurance is essential to protect businesses from potentially disastrous lawsuits. Most liability insurance covers businesses for damages they caused to property (Ex. Your employees damage another business’s equipment) and bodily injuries including medical payments if clients injure themselves at the premise of your business establishment.
How To Protect Your Business Assets?
In order to protect your own assets such as your business equipment, vehicles, and employees’ medical payments – you need to purchase a 1st party policy that covers your own losses. This policy is known as the “Business Owner Policy”, or BOP in short.
BOP is a bundle that provides all-around coverage for businesses with broad coverage instead of specialized risks. This type of policy is available for all small businesses that produce less than $3M in revenue in Texas. The BOP bundle covers you for the following:
- Business buildings and property.
- All business equipment.
- All property rented for business purposes or used for the businesses.
- Customer belongings that the business takes care of.
Pro Tip: Consider purchasing a BOP bundle policy in addition to a commercial liability policy to fully insure your business.