Insurance for Texas Contractors
Who is on your crew, what your agreements say, and what you can document decide how your policy is rated and who pays when something goes wrong. Here is how we work through that with contractors across Dallas-Fort Worth.
Who is actually on your policy
- W-2 employees
- 1099 crews
- True subcontractors
- Hold-harmless agreements
Paying a crew on a 1099 is a tax decision. It does not make them a subcontractor, and your carrier is not going to treat it that way. A true subcontractor carries their own general liability, often their own workers comp, sometimes their own commercial auto. Every policy they do not carry is one your business is quietly absorbing. Read the full breakdown.
What the carrier looks at
How much of your revenue is self-performed versus truly subcontracted, whether your subs carry their own coverage, and whether your subcontractor agreement includes a hold-harmless clause. Those three answers shape the premium before a quote is ever run.
The question that decides it
Who does this crew work for besides you? If the answer is nobody, a carrier will most likely treat them as your employee, and you are responsible for their injuries as well as their work.
A common misconception
That a certificate of insurance from a sub settles it. The classification follows the risk, not the paperwork, and a crew that works only for you is rated as yours.
Documentation that decides who pays
- Subcontractor agreement
- W-9
- Certificate of insurance
- Written incident reports
In this business, who pays is very often decided by who can show what happened. Two of Kristi’s contractor clients walked away from claims that were not theirs because they had photos, a written report, and proper notice on file. Read both stories.
The four-document file
Every subcontractor you hire should have a file with their service agreement, a signed subcontractor agreement, a copy of their W-9, and a copy of every insurance policy they carry.
Why a certificate is not enough
Plenty of people buy a policy to get the certificate, hand it over, and cancel the policy afterward. The paper in your file looks perfect and the coverage behind it is gone. Get the certificate, then call and verify it is in force.
A common misconception
That documenting a problem makes you responsible for it. In one case an HVAC contractor photographed a faulty connection, wrote it up, and never touched the equipment. That is what kept the claim off him.
Trucks, drivers, and personal vehicles
- Commercial auto
- Leaseback agreement
- Motor vehicle reports
- Workers comp
Drive a vehicle titled in your own name for business and an attorney can name your personal assets alongside your business assets in the same claim. A leaseback agreement, where you as an individual lease the vehicle to the business, is what walls that off. Read the vehicle article.
The underwriting question that surprises everyone
Whether your drivers are covered for workers comp elsewhere. If they are not, the auto carrier is on the hook for their injuries too, and the rate reflects it. Two clients with the same trucks can pay very different premiums for that reason alone.
Before you hand anyone the keys
Run a motor vehicle report on every employee who will drive a company vehicle. A clean record and a clean claims history keep the premium where it should be. Skipping this is how you learn about a driver’s history at the worst possible time.
A common misconception
That writing the mileage off on your taxes and being covered for a claim are the same decision. One is a tax choice. The other is a liability choice, and most owners have only made the first.
Coverage contractors ask about
- General liability
- Workers comp
- Commercial auto
- Tools & equipment
Most general contractors, landlords, and clients will require proof of general liability before you can start work. From there, the right program depends on your crew, your fleet, and what you carry from job to job. See the full coverage list.
General liability
Responds to third-party claims: a customer injured on site, property damage your crew causes on a job. It is usually the first policy a contractor buys and the one every certificate request is really asking about. What it does and does not cover.
Workers comp and commercial auto
Texas does not require workers comp, which is exactly why so many crews go without it and still call themselves subcontractors. Your commercial auto policy is rated partly on whether that comp is in place. People & Vehicles coverage.
Tools, equipment, and higher limits
Equipment that leaves the building takes its coverage with it unless inland marine is in place. And as jobs get larger, a commercial umbrella adds a layer standard policies do not reach. High-limit protection.
Questions contractors ask
The answers below are the short versions of conversations Kristi has with contractor clients every week. If your situation is different, that is what the consultation is for.
Does paying my crew on a 1099 make them subcontractors?
No. A 1099 is a tax decision. A true subcontractor carries their own general liability, and usually their own workers comp and commercial auto. A crew that works only for you and carries none of that will most likely be treated as your employee by the carrier.
Is workers comp required for contractors in Texas?
Texas does not require most private employers to carry workers comp. Going without it means the business, not a carrier, answers for employee injuries, and it also affects how your commercial auto policy is rated.
What should be in my file for every subcontractor?
Four documents: their service agreement with you, a signed subcontractor agreement, a copy of their W-9, and a copy of every insurance policy they carry. Then call the issuing agency and confirm the policy is actually in force.
I use my personal truck for the business. Am I covered?
If the truck is titled in your name, a claim can reach your personal assets as well as the business. A commercial auto policy plus a leaseback agreement, where you lease the vehicle to the business, is how that liability gets walled off.
Why does a contractor doing the same work pay less than I do?
Because premiums are rated on how a business is structured and documented, not on the trade alone. Unless you know their sub agreements, their comp status, and their claims history, it is not an apples-to-apples comparison.
Not sure which side of the line your crews are on?
A free consultation with Kristi takes 30 minutes. Bring your sub agreements and your current policies and you will leave knowing exactly how you are being rated, and why.
Ready to have someone in your corner?
Book a free consultation. We’ll walk through your business, identify the gaps, and build a strategy that actually fits.