2.2 Insurance Requirements for Registered Firms

Why This Section Matters

Financial responsibility is the one non-technical prerequisite that can shut a registered firm down overnight. Section 6002.153 is short and highly quotable, which makes it ideal exam material. Learn the two dollar figures, the coverage type, and who may issue and countersign the certificate.

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1. The Coverage Requirement (§ 6002.153(a))

The department may not issue a registration certificate unless the applicant files with the department evidence of a general liability insurance policy that includes products and completed operations coverage.

The policy must be conditioned to pay, on behalf of the insured, amounts the insured becomes legally obligated to pay as damages because of bodily injury and property damage caused by an occurrence involving the insured or the insured's officer, agent, or employee in the conduct of any business that requires a registration certificate or license under Chapter 6002.

Two details are frequently tested:

• Products and completed operations must be included. A bare premises-liability policy does not satisfy the statute, because most fire alarm exposure arises after the job is finished.
• The policy reaches conduct by the firm's officers, agents, and employees, not just the named insured.

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2. The Minimum Limits (§ 6002.153(b))

Unless the commissioner increases or decreases the limits by rule adopted under § 6002.051(b):

Memory hook: 100/300 per occurrence/aggregate. Note that the statute expresses the per-occurrence figure as a combined single limit — not split bodily-injury and property-damage limits.

Do not confuse this with a bond. Chapter 6002 requires insurance, not a surety bond, and § 6002.003(c)(3) actually forbids a political subdivision from requiring a bond.

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3. Who May Issue and Countersign (§ 6002.153(c))

The evidence of insurance must be a certificate of insurance:

1. Executed by an insurer authorized to engage in the business of insurance in this state; and
2. Countersigned by an insurance agent licensed in this state.

Surplus lines alternative. A certificate of insurance for surplus lines coverage procured in compliance with Insurance Code Chapter 981 through a surplus lines agent licensed under Subchapter E, Chapter 981, and resident in this state, may be filed with the department as evidence of the required coverage.

Burglar alarm overlap (§ 6002.153(f)). For an individual or organization licensed to install or service burglar alarms under Occupations Code Chapter 1702 (Private Security), compliance with that chapter's insurance requirements constitutes compliance with § 6002.153 if the insurance held complies with the applicable requirements. Many Texas alarm companies hold both credentials, and this provision prevents duplicate policies.

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4. Duration, Lapse and Consequences

• § 6002.153(d): An insurance certificate executed and filed with the department remains in force until the insurer has terminated future liability by the notice required by the department. The filing does not silently expire; the insurer must affirmatively notify.
• § 6002.153(e): Failure to maintain the liability insurance required by the section constitutes grounds for the denial, suspension, or revocation of a registration certificate — after notice and opportunity for hearing. Note the due-process qualifier: the certificate is not automatically void by operation of law.
• 28 TAC § 34.613(a)(5)(B): Each registered firm must maintain in force and on file in the SFMO a certificate of insurance identifying the insured and the exact nature of the business insured. The named insured must include either an assumed name, or the name of the corporation, the partners, or the sole proprietor as applicable.
• 28 TAC § 34.613(a)(6): A firm billing a customer for monitoring is engaged in the business of monitoring and must comply with the insurance requirements for a monitoring firm.
• Renewal interaction — § 6002.203(g): If a renewal application is incomplete but there has been no lapse in the required insurance, the applicant gets 30 days from notice of the deficiencies to comply; failure to correct within that period allows the department to charge a late fee.

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5. Worked Fact Patterns