A Practical Business Insurance Checklist for Texas Small Business Owners
No two businesses have exactly the same risk. A contractor, retail store, professional office, restaurant and online business need different policy structures. Commercial policies are not standardized in Texas, so names that sound similar can still contain different terms, limits and exclusions.
Describe what your business actually does, including side services, subcontracted work, delivery, online sales, professional advice and any work performed away from your primary location.
1. Make an inventory of business property
List the property your business owns, rents or depends on: furniture, inventory, tools, computers, signs, tenant improvements, machinery and property temporarily away from the premises. Building-owner coverage generally does not insure a tenant's contents.
Ask whether the policy uses replacement cost or actual cash value, which causes of loss are covered and whether property off-site, in transit or at customer locations needs special coverage.
2. Identify liability to customers and the public
Commercial general liability may address covered claims involving bodily injury, property damage, and certain personal or advertising injury arising from premises, operations, products or completed work. Limits, classifications and exclusions matter.
If you install, repair, manufacture, distribute or sell products, explain those activities completely. Review contracts that require additional-insured status, specific limits or certificates of insurance before work begins.
3. Consider professional mistakes separately
General liability is not a substitute for professional liability. Businesses that provide advice, designs, consulting, technical services, health services or other specialized work may need errors-and-omissions or professional liability coverage. Ask whether the policy is claims-made and what happens if coverage ends or the business changes carriers.
4. Plan for an interruption—not only damaged property
Property repairs are only part of a serious loss. A covered fire or other insured event may also stop operations, reduce revenue and create extra expenses. Business income coverage generally depends on direct physical loss or damage from a cause covered by the policy, and waiting periods or time limits may apply.
Estimate how long the business could take to resume operations. Consider payroll, rent, debt payments, temporary space, equipment rental and the time needed to replace specialized machinery or obtain permits.
5. Review every vehicle used for business
A personal auto policy may exclude or limit certain business use. Identify vehicles titled to the company, deliveries, transporting tools or goods, employees who drive, and hired or non-owned vehicles. Commercial auto coverage, hired and non-owned auto liability or other options may be needed depending on the operation.
6. Decide how to address employee injuries
Most private Texas employers may choose whether to carry workers' compensation insurance, but choosing not to carry it creates notice and reporting duties and can leave the employer exposed to employee lawsuits. Government contracts or other agreements may require coverage.
Workers' compensation can provide covered medical and income benefits for job-related injuries or illnesses. Discuss your payroll, employee duties, locations, owners and subcontractor relationships accurately.
7. Treat data and fraud as business risks
If the business stores customer information, accepts electronic payments, uses cloud software or relies on email, consider cyber liability and data-breach response. Ask about social-engineering fraud, funds transfer, ransomware, notification expenses, forensic investigation and business interruption caused by a cyber event. Coverage varies widely.
8. Match limits to contracts and real exposure
Landlords, lenders, vendors and clients may require certain limits, endorsements or certificates. A certificate is evidence of coverage at a point in time; it does not change the policy. Send contract insurance requirements to your agent early so there is time to review whether they can be met.
Buildings, contents, stock, tools and equipment.
Operations, products, completed work and professional services.
Revenue interruption and necessary extra expenses.
Employees, owners, drivers and business-use autos.
Information your insurance agent may request
- Legal business name, entity type and years in operation
- Detailed description of operations and projected revenue
- Locations, building details and property values
- Payroll by employee job duties
- Vehicle and driver information
- Subcontractor practices and certificates
- Prior coverage and loss history
- Contracts with insurance requirements
Frequently asked questions
What is a business owners policy?
A business owners policy, often called a BOP, commonly combines certain property, liability and business-income coverages for eligible businesses. Forms, options and eligibility vary by company.
Does my landlord's policy cover my business property?
Generally, a building owner's policy does not insure a tenant's furniture, inventory, equipment or liability. A tenant should review its own coverage needs and lease requirements.
Do Texas businesses have to carry workers' compensation?
Most private Texas employers may choose whether to carry it, but non-subscribers have legal notice and reporting obligations, and certain contracts or operations may require coverage.
When should a commercial policy be reviewed?
Review it at least at renewal and whenever operations, revenue, payroll, locations, property, vehicles, ownership or contracts materially change.
Request a Texas business insurance review.
Tell Tran & Lee Insurance Agency how your business works so we can help review available commercial insurance options.
Disclaimer: This article provides general educational information and does not provide legal, tax, financial or coverage advice. Commercial insurance policies vary. Coverage is subject to the policy's terms, limits, conditions, deductibles and exclusions. Consult qualified professionals regarding your specific obligations.