Are Businesses Required to Have Insurance?

Assessing risks and implementing loss control strategies are integral to operating your business. Regardless of size or sector, your company must account for various perils and ensure it is prepared to manage unexpected incidents. Furthermore, your business may be required to maintain certain precautions, such as carrying mandated insurance coverage. Failing to adhere to such requirements could mean noncompliance fines and reputational damages, leading to high out-of-pocket costs. 


What Types of Insurance Are Required for Businesses? 


Business insurance requirements may vary depending on various attributes of your organization, such as its location and industry. Consider how the following criteria may apply to your business:  


Workers’ compensation insurance—While workers’ compensation insurance is required by law for most employers across the United States, Texas generally does not carry such a mandate for most. However, a few exceptions exist (e.g., businesses that contract with government entities). Regardless, your organization should consider this coverage to ensure you and your employees can access necessary resources following work-related injuries or illnesses. 


Commercial property insurance—This coverage, also known as business property insurance, may be required by landlords if you rent or lease your building or premises. By maintaining adequate commercial property coverage, your business may be protected financially from losses involving structures, equipment, furniture and inventory. If you have a mortgage on your building, your lender may require you to maintain this coverage. 


Commercial auto insurance—Like individuals and families, employers are generally required to carry certain minimum levels of auto liability coverage. This ensures financial relief is available to third parties if you or your employees are at fault in an accident. Regardless of requirements, this coverage is essential if your business owns motor vehicles. Furthermore, the minimum required liability limits should not be relied on as providing adequate protection. Additional coverage may be needed to protect your business from potentially devastating out-of-pocket costs. 


Additional Advisable Types of Insurance 


Although insurance may not be required by law, most organizations should strongly consider maintaining the following coverages: 

General liability insurance—If your business is responsible for a third party’s losses, such as bodily injury or property damage, this insurance can provide financial assistance. 


Business interruption insurance—This coverage, also known as business income insurance, can help pay for costs and losses following a temporary pause or change in your company’s everyday operations due to a covered event. 


Professional liability insurance—If your company is sued for allegedly providing incomplete, inadequate or late services, this coverage, also known as errors and omissions insurance, can help pay for legal costs. 


Cyber liability insurance—As more employers begin to rely on technology in day-to-day operations, this coverage should be strongly considered to provide financial protection from cyber incidents, such as phishing attacks or malware infections. 


Employment practices liability insurance—This coverage can provide financial assistance if a current, former or prospective employee sues your business for alleged improper workplace practices, such as discrimination, wrongful termination or sexual harassment. 

All businesses have unique circumstances that may change their insurance needs and requirements. Even if certain coverages are not required by law for your industry, your company should strongly consider maintaining adequate policies. Even a single accident or mistake could lead to catastrophic out-of-pocket costs without sufficient insurance. 


Get the Right Coverage 


We’re here to help. With over 55 years of experience, Amador Insurance is well-equipped to ensure your business has optimal coverage. We will work with you to assess your coverage needs and requirements, research all available options and construct a comprehensive insurance portfolio that can protect your finances and secure your future.  


Visit our website or call 214-942-7979 to get started today. 



This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.