# Texas General Contractor Insurance: Subcontractor Comp, Indemnity and Wrap-Up Rules URL: https://mycontractorsinsurancequote.com/texas/audiences/general-contractors Updated: 2026-10-29 · Reviewed by the Principal, Gleason Insurance Brokers, LLC Publisher: My Contractors Insurance Quote, a website of Gleason Insurance Brokers, LLC A Texas general contractor's insurance file has to do the work a license board does in other states, starting with each subcontractor's workers' comp status. Labor Code §406.122 can treat a subcontractor's workers as the GC's employees for comp purposes unless the subcontractor is an independent contractor with a written agreement assuming employer duties. Insurance Code chapter 151 then shapes what indemnity a GC can demand from those subcontractors and what a wrap-up sponsor must disclose before the GC enrolls. ## Key Decision Points - Get a written §406.122 agreement from each independent subcontractor, or plan to cover its workers. - A GC can agree in writing to cover a subcontractor under §406.123, but the agreement must be filed with the GC's comp carrier by the 10th day. - Indemnity for a subcontractor's own employee injuries survives chapter 151 under §151.103. - Wrap-up sponsors must disclose program details by the 10th day before contract signing, or the GC may decline to enroll. - Trade subcontractors such as electricians and air conditioning contractors still need TDLR licenses. ## When a Subcontractor's Workers Count As the GC's Employees Labor Code §406.122(a) says that, for workers' compensation purposes, a person who works for a general contractor that is an employer under the comp statute is that GC's employee unless the person is operating as an independent contractor or is employed by one. Subsection (b) adds the condition that matters in practice: a subcontractor and its employees are not the GC's employees only if the subcontractor is an independent contractor and has entered into a written agreement with the GC in which it assumes the responsibilities of an employer for the work. That makes the subcontract itself part of the comp program. A GC that carries comp but hires a crew under a purchase order, with no written agreement, may find the crew treated as its own employees for comp purposes, with payroll that shows up at audit. A Texas subcontract form usually includes an independent contractor clause written to §406.122(b), and the GC's insurance coordinator checks that it is signed before the subcontractor mobilizes. This is a Texas-specific step that a GC moving in from California or Arizona may not have in its forms. The statewide elective comp system behind this rule is summarized under [Texas workers' comp and licensing rules](https://mycontractorsinsurancequote.com/texas). ## Covering a Subcontractor Under the GC's Comp Policy Labor Code §406.123 lets a GC and a subcontractor agree in writing that the GC will provide comp coverage to the subcontractor and its employees. The GC may then deduct the actual payroll-based premiums from the contract price. Such an agreement makes the GC the employer of the subcontractor and its employees only for purposes of the Texas comp laws. The GC must file a copy with its comp carrier not later than the 10th day after the contract is executed, and failing to file is an administrative violation. Subsection (b) adds an automatic rule: if a GC with comp contracts with a subcontractor that has no employees, the GC is treated as that subcontractor's employer for comp purposes. Sole proprietors on a jobsite can therefore become part of the GC's payroll exposure without any agreement. GCs that use many one-person trades often set a written policy on when they will extend coverage, when they will require the subcontractor's own policy and how audit payroll will be documented, so the carrier's audit matches the contract file. Certificates, endorsements and agreements belong in one file, as described in [documenting subcontractor risk transfer](https://mycontractorsinsurancequote.com/resources/completed-operations-and-subcontractor-work). ### Illustrative scenario: A Houston-Area Tilt-Wall Job with One-Person Trades A commercial GC carries workers' comp and builds a tilt-wall distribution building in Harris County for a private owner. Its framing and drywall scopes go to several one-person crews paid by purchase order, and its electrical scope goes to a nonsubscriber with eight employees. At audit, the comp carrier treats the one-person crews as the GC's employees under Labor Code §406.123(b) and adds their pay to the GC's payroll. The electrical subcontract has a §406.122(b) independent contractor clause, but it was never signed. When one of the electrician's employees is hurt, the GC relies on the subcontract's employee-injury indemnity, which §151.103 preserves, and on the electrician's general liability policy, whose response depends on its contractual liability and additional insured terms. ## What Indemnity and Additional Insured Terms a GC Can Still Require Chapter 151 voids broad-form indemnity and the matching additional insured coverage on many Texas construction contracts, but §151.103 preserves one important category for GCs. A subcontract may still require the subcontractor to indemnify, hold harmless or defend the GC or a third party against claims for bodily injury or death of the subcontractor's own employee, or the employee of its agent or lower-tier subcontractor. Where a subcontractor is a nonsubscriber, that employee claim is exactly the exposure a GC most wants transferred. The GC still sits in the middle. The owner's contract may ask the GC for more than chapter 151 allows, while the GC's subcontract can only pass down what the statute permits, so a mismatch can leave the GC holding the difference. Additional insured endorsements on the subcontractor's policy should be checked for how they respond on Texas work and whether they extend to completed operations. A GC usually asks counsel to align the owner contract and the subcontract forms with the same chapter 151 analysis before bid day. How additional insured status fits a per-project program is explained in [project liability and risk transfer](https://mycontractorsinsurancequote.com/project-specific-liability-insurance). ## Wrap-Up Enrollment: Texas Disclosure Deadlines When a Texas contract requires enrollment in a consolidated insurance program, Insurance Code §151.003 requires the principal to give the contractor program information not later than the 10th day before the contract is signed. The list is detailed: contacts for the administrator and claims, eligibility criteria, the covered site, a summary of coverages with policy form numbers or sample forms, limits and sublimits, material endorsements, how to include or exclude insurance cost in the bid, deductible assessment methods and payroll and claims reporting duties. Under §151.004, a GC that requires its subcontractors to enroll must pass the same information down on the same schedule. The statute gives contractors leverage. Under §151.006, if the information is not provided on time, the contractor may elect not to enroll. Under §151.007 an enrolled contractor may request a complete copy of the wrap policy, and §151.008 makes failure to provide it by the later of the 75th day after the request or the 90th day after the contractor's covered work begins a material breach. A GC bidding an OCIP job, or running its own CCIP, should calendar these dates as carefully as bond and permit dates. A GC sponsoring its own program takes on the principal's duties described for [contractor-controlled insurance programs](https://mycontractorsinsurancequote.com/wrap-up-insurance/ccip). ## When a Captive May Be Worth Evaluating for a Texas GC Texas licenses captives under Insurance Code chapter 964 to insure the operational risks of a company's affiliates and certain controlled unaffiliated businesses, with at least $250,000 of capital and a 0.5 percent premium tax. A Texas GC with credible general liability and excess losses may study whether a captive could finance part of that layer. Chapter 964 bars a Texas captive from writing workers' compensation and from issuing coverage, including auto liability, that a law requires from an authorized insurer, so those lines usually stay with licensed carriers. Feasibility depends on the GC's losses, capital, contracts and the regulator's review. Formation, taxes and line limits are covered under [Texas captive rules under chapter 964](https://mycontractorsinsurancequote.com/construction-captive-insurance-programs/texas). ## No GC License, But Licensed Trades and Owner Qualification Because Texas has no statewide general contractor license, the GC's own credentials come from its contracts, its bonding line and its loss history. Licensed trades still apply below the GC: TDLR licenses electricians and air conditioning and refrigeration contractors among other programs. The GC typically confirms those licenses before awarding a scope. An unlicensed trade subcontractor can create both a regulatory problem and an argument over whether its work falls inside the GC's policy conditions. Sureties fill much of the gap a license board would otherwise fill. A Texas GC's bonding capacity usually depends on reviewed or audited financial statements, a work-in-progress schedule, backlog and the principals' personal indemnity. Public owners require performance and payment bonds above the chapter 2253 thresholds, and many private owners and lenders ask for them too. A GC that keeps its surety file current tends to find the insurance submission easier, because underwriters ask for much of the same information. What a surety reviews before it backs a contract is explained under [performance bond underwriting for GCs](https://mycontractorsinsurancequote.com/construction-surety-bonds/performance-bonds). ## Before You Ask for a Quote ### What to Gather - Signed subcontracts with §406.122(b) independent contractor and employer-responsibility language - Each subcontractor's comp certificate or written nonsubscriber status - Any §406.123 coverage agreements and proof they were filed with the GC's comp carrier - TDLR license numbers for electrical and air conditioning subcontractors - The owner contract's indemnity and additional insured exhibit - Wrap-up program information received under §151.003 and the date it arrived ### What to Ask the Insurer or Surety - How will the comp carrier treat one-person subcontractors at audit? - Does the subcontractor's additional insured endorsement respond on Texas work and extend to completed operations? - Does the GC's liability policy respond to an injury claim from a nonsubscriber subcontractor's employee? - If the GC sponsors a CCIP, what disclosures and policy copies must it provide to subcontractors? - What financial statements will the surety need to support the next bonded project? - Are owner-required limits and endorsements achievable under the chapter 151 limits? ## Broker Notes **Quick Answer:** A Texas GC should have a signed written agreement under Labor Code §406.122(b) with each independent subcontractor, or its workers may be treated as the GC's employees for comp. Chapter 151 still allows indemnity for a subcontractor's own employee injuries. **Common Mistake:** Hiring one-person crews by purchase order. Under §406.123(b) a GC with comp may be treated as their employer, and the payroll appears at audit without having been priced into the job. **Broker Perspective:** A broker reviewing a Texas GC looks at the subcontract forms first: the §406.122 clause, the §151.103 employee-injury indemnity and the additional insured requirement, then the comp audit history. **Coverage Impact:** Subcontractor comp status typically changes the GC's comp payroll and its liability exposure to injured workers. Whether the GC's or the subcontractor's liability policy responds depends on the forms, the contractual liability terms and the additional insured endorsement. ## Questions Buyers Ask ### Do I need a written agreement with my Texas subcontractors for workers' comp? In practice, yes. Under Labor Code §406.122(b), a subcontractor and its employees are not your employees for comp purposes only if the subcontractor operates as an independent contractor and has a written agreement with you assuming the responsibilities of an employer for the work. Without the written agreement, your carrier may treat them as your employees. ### Can I put a subcontractor on my own comp policy in Texas? Yes. Labor Code §406.123 allows a written agreement under which you provide comp coverage to the subcontractor and its employees and deduct the actual payroll-based premium from the contract price. You become their employer only for comp purposes. You must file a copy of the agreement with your comp carrier not later than the 10th day after the contract is executed. ### Can my subcontract still require indemnity for injuries to the sub's own workers? Generally yes. Insurance Code §151.103 carves out provisions requiring a party to indemnify, hold harmless or defend against claims for bodily injury or death of its own employee, its agent's employee or a lower-tier subcontractor's employee. The wording still matters, and the subcontractor's liability policy has to be able to respond, so counsel and a broker should review both. ### What happens if the owner doesn't send OCIP details before I sign? Insurance Code §151.003 requires the principal to provide detailed program information not later than the 10th day before you enter the contract. Under §151.006 you cannot be required to sign a contract requiring enrollment unless that information was provided, and if it arrives late you may elect not to enroll. You can also request a full copy of the wrap policy under §151.007. ## Official Sources 1. [Labor Code ch. 406 (§406.122 employee status; §406.123 GC-provided coverage)](https://statutes.capitol.texas.gov/Docs/LA/htm/LA.406.htm), Texas Legislature, Texas Constitution and Statutes. Subcontractor employee status, written independent contractor agreements, GC-provided coverage agreements, premium deduction, 10-day filing with the carrier and the rule for subcontractors without employees Verified 2026-10-23. 2. [Insurance Code ch. 151 (§151.003-.008 wrap-up disclosures; §151.103 employee claim exception)](https://statutes.capitol.texas.gov/Docs/IN/htm/IN.151.htm), Texas Legislature, Texas Constitution and Statutes. Information a principal and contractor must provide before enrollment, the right to decline enrollment, policy copy requests and deadlines, and the employee-injury indemnity exception Verified 2026-10-23. 3. [TDLR licensing programs](https://www.tdlr.texas.gov/), Texas Department of Licensing and Regulation. TDLR licenses trades such as electricians and air conditioning and refrigeration contractors and has no general contractor program Verified 2026-10-23. 4. [Government Code ch. 2253 (public work bonds)](https://statutes.capitol.texas.gov/Docs/GV/htm/GV.2253.htm), Texas Legislature, Texas Constitution and Statutes. Public owners require performance and payment bonds above statutory thresholds Verified 2026-10-23. ## Related Decisions - [captive programs for general contractors](https://mycontractorsinsurancequote.com/construction-captive-insurance-programs/general-contractors) - [Texas project insurance overview](https://mycontractorsinsurancequote.com/texas) - [general contractor project insurance](https://mycontractorsinsurancequote.com/who-we-serve/general-contractors) - [enrolling in an owner-controlled program](https://mycontractorsinsurancequote.com/wrap-up-insurance/ocip) - [completed operations after turnover](https://mycontractorsinsurancequote.com/project-specific-liability-insurance/completed-operations) - [commercial GC programs](https://mycontractorsinsurancequote.com/who-we-serve/commercial-general-contractors) --- Start a quote request: https://mycontractorsinsurancequote.com/get-a-quote · Call 844-978-7283 Contract and insurance reviews are a courtesy service that may be available at times, depending on our workload and on the size, timing and complexity of the project. A review is not guaranteed and is limited to insurance considerations. It is not legal advice and is not a substitute for advice from your own legal counsel, which you may need before signing a contract or obtaining coverage. Insurance and surety services are provided through Gleason Insurance Brokers, LLC. Site information is educational and does not constitute legal advice, a binder, an offer of coverage, a guarantee of eligibility or confirmation of policy terms. Insurance conditions are governed by actual issued policies; surety rights and obligations are governed by bond and indemnity documents.