Title: How to Avoid the Top Mistakes Commercial Contractors Make When Choosing Insurance Author: lindsey Published: June 10, 2025 --- # How to Avoid the Top Mistakes Commercial Contractors Make When Choosing Insurance When you’re a commercial contractor in Texas—especially in rapidly growing areas like Plano, Collin County, and the surrounding DFW Metroplex—insurance isn’t just a line item on your expense sheet. It’s a critical part of your risk management strategy. The right policy can save your business from financial ruin, while the wrong one—or worse, no coverage at all—can leave you exposed to lawsuits, project delays, and lost revenue. At **Sterling Insurance Group**, we’ve helped contractors throughout Texas navigate the complex world of commercial insurance. Over the years, we’ve seen the same mistakes repeated again and again—mistakes that cost contractors thousands of dollars, their reputations, or even their businesses. Here’s how to avoid the top mistakes commercial contractors make when choosing insurance. **Mistake #1: Choosing the Cheapest Policy Instead of the Right Coverage** One of the most common mistakes we see is prioritizing price over protection. It’s tempting to choose the lowest-cost policy, especially for smaller contractors or those just starting out. But that low premium often comes with limited coverage, high deductibles, or exclusions that can cost far more in the long run. **What You Should Do:** * **Look beyond price** and consider what’s actually covered. * Review **policy limits**, **deductibles**, and **exclusions**. * Partner with a local agent who understands the construction risks unique to North Texas—including weather events, soil movement, and labor shortages. **Mistake #2: Failing to Understand Policy Exclusions** Exclusions are the fine print that can turn an “all-risk” policy into one that covers almost nothing. For example, many general liability policies exclude subcontractor work or specific construction defects. **What You Should Do:** * Ask your agent for a **clear explanation of all exclusions**. * Request endorsements or riders to fill any critical gaps. * Ensure coverage applies to **your entire scope of work**, including subcontractors and specialized trades. **Mistake #3: Not Carrying Enough General Liability Coverage** In Texas, general liability insurance isn’t mandatory by law—but it’s absolutely essential for contractors. Unfortunately, many contractors don’t carry enough coverage to handle real-world claims, especially those involving property damage, bodily injury, or completed operations. **What You Should Do:** * Consider at least **$1 million per occurrence / $2 million aggregate** in general liability limits. * If you’re bidding on large commercial jobs in Plano or Frisco, check the **contractual insurance requirements**—they often require higher limits. * Don’t forget about **umbrella or excess liability** coverage to extend your protection. **Mistake #4: Not Listing All Business Operations** Many contractors operate across multiple specialties—concrete, framing, roofing, electrical, etc.—but only list one primary operation when applying for insurance. If you’re not fully transparent, your insurer may deny a claim based on undeclared business activities. **What You Should Do:** * Be upfront about **all types of work** your company performs. * If your operations change (e.g., you start doing HVAC in addition to general contracting), notify your agent immediately. * Make sure your policy is updated annually to reflect your **current scope of work**. **Mistake #5: Ignoring Workers’ Compensation** Texas is the only state that doesn’t require private employers to carry workers’ compensation. But that doesn’t mean you’re off the hook. If a worker gets injured, you could be sued for medical bills, lost wages, and more. **What You Should Do:** * Carry **workers’ compensation insurance** or an approved alternative like an ** Occupational Accident Policy with Employer’s Liability**. * Understand that workers’ comp protects **your employees and your business**. * Many general contractors in Collin County **require subs to carry workers’ comp** before they’ll hire them—so having this coverage can give you a competitive edge. **Mistake #6: Poor Subcontractor Risk Management** Hiring subcontractors introduces liability to your business, especially if they’re uninsured or underinsured. If something goes wrong, you could be held responsible— even if the sub caused the issue. **What You Should Do:** * Require **Certificates of Insurance (COIs)** from every subcontractor before work begins. * Verify that their coverage meets or exceeds **your own policy limits**. * Have your subs list your business as an **Additional Insured** on their policy. * Use contracts that include **hold harmless and indemnification clauses**. **Mistake #7: Not Carrying Builders Risk Insurance** Builders risk insurance protects a project under construction from events like fire, theft, vandalism, and weather damage. Many contractors skip this essential coverage, assuming the client or property owner will handle it. **What You Should Do:** * Confirm who is responsible for builders risk coverage **before the project begins**. * If it’s your responsibility, work with an agent to secure coverage tailored to: - The **project size and value** - The **duration of the job** - Risks specific to Texas (hailstorms, tornadoes, flooding) * Don’t forget to include **materials stored on-site or in transit**. **Mistake #8: Having Gaps in Commercial Auto Coverage** If you or your employees drive to job sites, pick up materials, or operate vehicles in the course of business, you need commercial auto insurance. Personal auto policies** won’t cover business use**—and gaps can be costly in an accident. **What You Should Do:** * Insure **all business vehicles** under a commercial auto policy. * If employees drive their own vehicles for work, add **hired and non-owned auto( HNOA)** coverage. * Keep an up-to-date list of **covered drivers** and conduct regular **MVR checks**( Motor Vehicle Reports). **Mistake #9: Not Updating Coverage as You Grow** A policy that worked when you were a small operation may no longer be enough once you take on bigger projects or hire more employees. Many contractors in fast-growing areas like McKinney or Allen forget to scale their insurance as their business grows. **What You Should Do:** * Schedule a **yearly insurance review** with your agent. * Update coverage any time you: - Add new employees - Take on larger or riskier projects - Purchase new vehicles or equipment - Expand your operations into new areas **Mistake #10: Choosing a National Carrier Without Local Expertise** Insurance from a national provider might seem convenient, but they may not understand the unique challenges of building in Texas—like clay soil that shifts, extreme weather swings, or the specific permitting regulations in Collin County cities. **What You Should Do:** * Choose a local agency, like **Sterling Insurance Group**, that knows your business environment. * Work with agents who are familiar with: - Local building codes - Regional litigation trends - Common claim scenarios in Texas * Local agents can **advocate on your behalf** and **get claims resolved faster**. **Why Sterling Insurance Group Is the Go-To for Texas Contractors** At **Sterling Insurance Group**, based right here in **Plano**, we’ve built our reputation on helping contractors across Collin County and beyond protect what they’ve worked hard to build. Our team specializes in construction and contractor insurance— so whether you’re a general contractor in Frisco, a roofer in Allen, or an electrician working across DFW, we’ve got you covered. Here’s what you get when you partner with us: * **Customized insurance solutions** built around your operations * **Fast COI turnaround** to keep your projects on schedule * **Risk management support** to reduce claims and costs * **Ongoing policy reviews** as your business grows * Access to **top-rated carriers** with competitive pricing **Protect Your Business Before It’s Too Late** In construction, the unexpected is inevitable—but the right insurance makes it manageable. By avoiding these common mistakes and working with a trusted local agency, you can safeguard your business, your team, and your reputation. Don’t wait until something goes wrong to realize you’re underinsured. **Let’s talk.** Contact **Sterling Insurance Group in Plano, TX**, today to schedule your free contractor insurance review. **Sterling Insurance Group | (972) 964-4825 | **[sterlinginsnow.com](https://www.sterlinginsnow.com/contact/)**** **Follow Us: **[Facebook](https://www.facebook.com/sterlinginsurancegrouptx)** |** [Instagram](https://www.instagram.com/thesterlinginsurancegroup/)** | **[LinkedIn](https://www.linkedin.com/company/the-sterling-insurance-group/)** | **[YouTube](https://www.youtube.com/channel/UCfs-ExnjzrFwd-geKKMRI4A)** ** #### Would You Like Us To Review Your Policies? * Are you a current client of our agency?* - Yes - No * What policy number(s) do you need help with if available? * | | [](https://www.sterlinginsnow.com/how-to-avoid-the-top-mistakes-commercial-contractors-make-when-choosing-insurance/void(0);?output_format=md) [](https://www.sterlinginsnow.com/how-to-avoid-the-top-mistakes-commercial-contractors-make-when-choosing-insurance/void(0);?output_format=md) | * What is the nature of your inquiry?* - General Question - ID Card Request - Policy Change Request - Discuss A Claim - Certificate of Insurance * Describe your policy change request * What date do you need this policy change/request to take effect?* * DD slash MM slash YYYY * Which vehicle do you need an ID card for (please enter year, make, and model)? * | Year | Make | Model |   | | | | | [](https://www.sterlinginsnow.com/how-to-avoid-the-top-mistakes-commercial-contractors-make-when-choosing-insurance/void(0);?output_format=md) [](https://www.sterlinginsnow.com/how-to-avoid-the-top-mistakes-commercial-contractors-make-when-choosing-insurance/void(0);?output_format=md) | * Your Name* * First Last * Your Email* * Your Phone* * Please list the Additional Insured and/or Certificate Holder * Additional Insured and/or Certificate Holder Address * Street Address Address Line 2 City State / Province / Region ZIP / Postal Code * Details regarding your question, policy change, claim or other request:* * hCaptcha ### Request Your Proposal Here Are you ready to save time, aggravation, and money? 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