Key Takeaways
- Texas follows a modified comparative negligence system with a 51% bar for fault allocation
- Commercial general liability policies use file and use rate regulation
- Texas has specific requirements for pollution liability disclosure
- Professional liability insurance is required for certain licensed professions
- Punitive damages are insurable in Texas with some limitations
Last updated: January 2026
Texas General Liability Insurance
Texas has specific requirements for general liability insurance that agents must understand.
Modified Comparative Negligence
Texas uses modified comparative negligence with a 51% bar:
How It Works
- Fault is allocated among all parties
- Damages reduced by percentage of fault
- 51% Rule: If more than 50% at fault, NO recovery
- Joint and several liability applies in some cases
Joint and Several Liability
Texas modified joint and several liability:
| Defendant Fault | Liability Rule |
|---|---|
| More than 50% responsible | Joint and several for entire amount |
| 50% or less responsible | Several liability only (their share) |
Commercial General Liability (CGL)
Texas CGL policies must comply with state requirements:
Required Elements
- Occurrence vs. claims-made coverage clearly disclosed
- Coverage territory defined
- Limits per occurrence and aggregate
- Defense costs—duty to defend
- Pollution exclusion with disclosure
Rate Regulation
Under file and use:
- Rates filed with TDI
- Can be used immediately
- Subject to post-implementation review
- Must be actuarially justified
Professional Liability
Texas requires or regulates professional liability for various professions:
State-Mandated Coverage
| Profession | Requirement |
|---|---|
| Attorneys | Must disclose if no coverage (SBOT Rule) |
| Architects | E&O for licensed practice |
| Engineers | E&O for licensed practice |
| Real Estate Agents | Recommended but not required |
| Insurance Agents | Recommended but not required |
Pollution Liability
Texas has specific pollution liability requirements:
Disclosure Requirements
- Pollution exclusion must be disclosed
- Environmental impairment liability options explained
- Underground storage tank requirements
- Cleanup cost coverage options
Texas Environmental Laws
- CERCLA and Texas equivalents apply
- Texas Commission on Environmental Quality (TCEQ) oversight
- Strict liability for certain hazardous activities
- Site cleanup requirements
Punitive Damages
Unlike many states, Texas allows insurance for punitive damages:
Texas Rule
| Feature | Details |
|---|---|
| Insurability | Generally insurable in Texas |
| Public Policy | No prohibition against insuring punitive damages |
| Coverage | Depends on policy language |
| Exceptions | Intentional acts may be excluded |
Key Differences
- Texas is more permissive than states like California
- Policy language controls coverage
- Gross negligence punitive damages may be covered
- Intentional conduct exclusions common
Products Liability
Texas products liability insurance:
Coverage
- Bodily injury from defective products
- Property damage from defective products
- Products-completed operations hazard
- Aggregate limits apply
Texas Law
- Strict liability for manufacturing defects
- Negligence for design defects
- Statute of repose: 15 years for products
Test Your Knowledge
Under Texas law, are punitive damages generally insurable?
A
B
C
D
Test Your Knowledge
If a defendant is 40% at fault under Texas's modified comparative negligence, what is their liability?
A
B
C
D