Texas HVAC Contractor Insurance
What Texas Requires
Contractors are licensed through TDLR's Air Conditioning and Refrigeration Contractor program — the TACL license — and the required GL limits depend on your class:
| Coverage | Class A | Class B |
|---|---|---|
| Per occurrence, combined property damage and bodily injury | $300,000 | $100,000 |
| Aggregate, property damage and bodily injury | $600,000 | $200,000 |
| Aggregate, products and completed operations | $300,000 | $100,000 |
Class A covers equipment of any size. Class B is limited to cooling systems of 25 tons and under and heating systems of 1.5 million BTU/hr and under. You must maintain the coverage at all times while the license is active, from a provider authorized to sell liability insurance in Texas.
The Class B contractor who takes a job over 25 tons of cooling or 1.5 million BTU/hr of heating is operating outside the license, which puts the claim in dispute territory regardless of the limit. Upgrading the license and the limit go together.
Sources: 16 Tex. Admin. Code § 75.40 · TDLR contractor license requirements · TDLR Form ACR-LIC-009
Where the State Minimum Isn't Enough
TDLR's $300,000 (Class A) or $100,000 (Class B) per occurrence is a licensing floor, not a working limit. Almost nobody hiring you accepts it.
A contract can require more than the license does, and its insurance exhibit says how much. Before you buy to the state minimum, read the exhibit in the contracts you actually bid: the per-occurrence and aggregate limits, any umbrella or excess requirement, and the endorsements it names. If it asks for more than you carry, you'll be changing the policy mid-year.
Public and institutional owners set their own requirements above the state floor — read the insurance exhibit in the contract you're actually bidding.
Workers' Comp: Texas Is Different
In Texas, a private employer can choose whether to carry workers' compensation: under Labor Code § 406.002(a), an employer "may elect to obtain workers' compensation insurance coverage," except public employers and as otherwise provided by law. That creates three traps HVAC contractors walk into.
If you go without it, you're a non-subscriber. You must file a notice of no coverage with the Texas Department of Insurance's Division of Workers' Compensation through its Employer E-File system, notify employees in writing, post notice at the workplace, and file annually. You also lose the common-law defenses that comp normally gives you, which means an injured employee can sue you directly for negligence.
If you work government jobs, it isn't optional. Contractors on state or local government building and construction contracts must provide workers' comp for every employee on the project.
If you use uninsured subs, their injuries can land on your policy. Your comp auditor will count an uninsured sub as your employee and charge you the payroll at your class rate. Collect certificates from every sub before they start, and check that the certificate was active on the dates they worked.
Sources: Tex. Labor Code § 406.002 · TDI Division of Workers' Compensation, non-subscriber notices and Employer E-File · Tex. Labor Code § 406.033 · Tex. Labor Code § 406.096 · TDLR electrical contractor license requirements
What Drives Your Premium
Three things, in rough order of impact:
- Payroll and class code. Comp is rated per $100 of payroll by class code. If your whole payroll is lumped into the highest-rated code, you're overpaying — including office staff who never touch a job site.
- Percentage of work at height, and commercial versus residential mix. Residential service work and high-rise commercial are different risks and often different carriers.
- Subcontractor spend. Money paid to uninsured subs gets added to your rating basis at audit.
Review your class code assignments with your broker before renewal, not after the audit catches the discrepancy. Audit disputes are winnable but slow, and the bill is due while you argue.
The Endorsements That Decide Whether You Get Paid
The coverage argument on a job site is almost never about the limit. It's about endorsements.
- CG 20 10 adds an additional insured for ongoing operations. CG 20 37 covers completed operations. A GC contract usually requires both.
- Primary and non-contributory wording means your policy pays first. Without it, your carrier can point at the GC's policy and stall.
- Waiver of subrogation gives up your carrier's right to recover from the GC after it pays. Check whether your contract's insurance exhibit asks for it.
- Blanket additional insured beats per-certificate endorsements once you're running multiple jobs. Ask whether certificates are unlimited or priced individually.
Two exposures specific to this trade. Brazing and torch work is hot work, and a general liability policy can attach hot work conditions or exclusions — confirm yours doesn't, before a job rather than after. And anyone on your crew who opens a refrigerant circuit needs EPA Section 608 certification. An uncertified tech handling refrigerant is a regulatory problem and a complication on any claim tied to that work.
Source: 40 CFR § 82.161
What You Should Actually Carry
Carry the coverages below, at the amount your license or your contract sets:
| Coverage | Why |
|---|---|
| General liability | At least the TDLR minimum for your license class in the table above. A contract's insurance exhibit can require more; read it before you bid. |
| Workers' compensation | Government jobs require it; subscriber status protects you from direct suit |
| Commercial auto | Personal auto policies exclude business use. A service van on a personal policy is a denied claim waiting to happen |
| Tools and equipment (inland marine) | Your GL covers damage you cause to others, not your own tools out of the van |
| Umbrella | When a contract's insurance exhibit calls for limits above your primary policy. The exhibit sets the amount, and whether it means umbrella or excess. |
| Installation floater | Materials on site before the job is complete, which property coverage does not reach |
Questions People Ask
How much liability insurance does Texas require for an HVAC contractor?
Contractors are licensed through TDLR's Air Conditioning and Refrigeration Contractor program — the TACL license — and the required GL limits depend on your class. Class A: $300,000 per occurrence, combined property damage and bodily injury; $600,000 aggregate, property damage and bodily injury; and $300,000 aggregate, products and completed operations. Class B: $100,000 per occurrence, $200,000 aggregate, and $100,000 aggregate, products and completed operations. Class B is limited to cooling systems of 25 tons and under and heating systems of 1.5 million BTU/hr and under.
Is workers' comp required for contractors in Texas?
In Texas, a private employer can choose whether to carry workers' compensation: under Labor Code § 406.002(a), an employer "may elect to obtain workers' compensation insurance coverage," except public employers and as otherwise provided by law. Contractors on state or local government building and construction contracts must provide workers' comp for every employee on the project.
What happens to my license if my insurance lapses?
If you hold a TDLR electrical or HVAC license, or a Responsible Master Plumber designation, your license depends on continuous coverage. There is no grace period written into any of them. You must maintain the coverage at all times while the license is active, from a provider authorized to sell liability insurance in Texas.
Can I get contractor insurance after being non-renewed?
A non-renewal is a placement problem with a deadline. It is not a verdict on your business, and it is not the same as a cancellation.
What's the difference between CG 20 10 and CG 20 37?
CG 20 10 adds an additional insured for ongoing operations. CG 20 37 covers completed operations. A GC contract usually requires both.