Quick answer: Texas requires very little insurance of a restaurant by law. Workers' compensation is optional for private employers, but a restaurant that opts out must file a notice with the state every year, tell its employees in writing, and gives up its main defenses if an injured worker sues. A TABC permit to sell alcohol does not require liquor liability insurance; the state's requirement is a $5,000 conduct surety bond, which a food and beverage certificate waives. Any vehicle you own needs at least $30,000 per person, $60,000 per accident and $25,000 of property damage liability. Everything else, general liability, property, liquor liability, umbrella, additional insured and waiver of subrogation, is required by your landlord, lender, franchisor or event venue, and those contracts are where most Texas restaurants find out what they must carry.
Texas restaurant insurance requirements at a glance
Two sets of rules decide what a Texas restaurant carries: state law, and the contracts you sign. Most guides blur them, which is why owners hear that workers' comp is both optional and mandatory. This table separates them.
| Requirement | Required by | Applies to | Source |
|---|---|---|---|
| Workers' compensation | Nobody, under state law; often required by contract | Private employers may elect coverage | Labor Code 406.002 |
| Notice of no coverage (DWC Form-005) | Texas Division of Workers' Compensation | Employers without workers' comp, filed every year | Labor Code 406.004; TDI |
| Written notice of coverage status to employees, and a posted notice | State law | Every employer, covered or not | Labor Code 406.005 |
| Injury reports for nonsubscribers | Texas Division of Workers' Compensation | Injuries costing more than one day of work | Labor Code 411.032 |
| Conduct surety bond | TABC | Wine and malt beverage retailer's and mixed beverage permits, unless exempt | Alco. Bev. Code 11.11 |
| Liquor liability insurance | Not required by state law; often required by landlords and venues | Any business that sells or serves alcohol | Your lease and contracts |
| Auto liability | State law | Every vehicle the business owns | Transportation Code 601.072 |
| General liability, property, umbrella | Landlords, lenders, franchisors, venues | Set by each contract | Your lease and contracts |
For what each line costs, see our guide to restaurant insurance cost.
Is workers' comp required for Texas restaurants? The nonsubscriber trade-off
No. In Texas, workers' comp is elective for private employers. Labor Code 406.002 says that, except for public employers and as otherwise provided by law, an employer may elect to obtain workers' compensation coverage. An employer that does not is called a nonsubscriber. Opting out is legal, but not paperwork-free or risk-free.
What a nonsubscriber restaurant must file and post
- An annual notice to the state. Labor Code 406.004 requires an employer without coverage to notify the Division of Workers' Compensation (DWC) in writing, on the forms and timeline the commissioner sets, and makes failure an administrative violation. That notice is DWC Form-005. In its annual reporting bulletin (2018), the Texas Department of Insurance (TDI) set the filing window as February 1 through April 30 and said the form can be filed online, by fax or by mail. Confirm the current window with DWC each year.
- Notice to every employee. Labor Code 406.005 requires every employer to tell each employee whether it has workers' comp, to tell new hires at the time they are hired, to post a coverage notice in conspicuous places at the business, and to notify employees within 15 days of getting, losing or cancelling coverage. With restaurant turnover, that is a constant task.
- Injury reports. Labor Code 411.032 requires an employer to report an injury that keeps an employee off work for more than one day, and any occupational disease it knows about. TDI's 2018 bulletin describes DWC Form-007 as the nonsubscriber report and says it applies to nonsubscribers with five or more employees.
What a nonsubscriber gives up in court
A covered employer gets the exclusive remedy: under Labor Code 408.001, workers' comp benefits are an injured employee's only recovery against the employer, with a narrow exception for exemplary damages when gross negligence or an intentional act causes a death. A nonsubscriber gets none of that. The employee can sue for negligence, and Labor Code 406.033 takes away three defenses the employer would otherwise use:
- Contributory negligence. It is no defense that the employee was careless.
- Assumption of risk. It is no defense that the employee knew the job was dangerous.
- Fellow-employee negligence. It is no defense that a coworker caused the injury.
The employer keeps two defenses, that the employee meant to cause the injury or was intoxicated, and the employee must still prove the employer was negligent. A waiver of the right to sue signed before an injury is void. One signed afterward counts only if it is voluntary, signed at least 10 business days after the injury was reported and after a medical evaluation by a nonemergency doctor, and printed conspicuously. An onboarding-packet waiver does nothing.
Why this matters in a restaurant kitchen
Kitchens test 406.033 every shift: wet floors, hot oil, knives, ladders in the walk-in, rushed coworkers. Many injuries involve some carelessness by the worker or a colleague, exactly the arguments a nonsubscriber cannot make. The Texas Supreme Court's Kroger Co. v. Keng (2000) shows how. An employee was hurt when boxes fell on her as she pulled them from the top shelf of a deli freezer. Because her employer was a nonsubscriber, the court held the jury could not be asked to weigh her own share of responsibility.
That does not make nonsubscription wrong for every restaurant, but it is a program to design with a broker and employment counsel, not a default. Answer three questions first: who pays medical bills and lost wages on day one, what limit stands behind a negligence lawsuit, and whether your lease or franchise agreement allows it. Our restaurant workers' comp page covers the subscriber side.
When Texas restaurants have to carry comp anyway
Leases, franchise agreements, hotel and concession contracts, and catering contracts often require statutory workers' comp plus employer's liability, with a waiver of subrogation in their favor. Read the insurance exhibit before you sign: a nonsubscriber can be in breach of its lease on day one without knowing it.
TABC permits, the conduct bond, and liquor liability
Restaurants that serve alcohol usually hold a wine and malt beverage retailer's permit (Alcoholic Beverage Code Chapter 25) or a mixed beverage permit (Chapter 28); other on-premise options include the retail dealer's on-premise license (Chapter 69), private club permits (Chapter 32) and brewpub licenses (Chapter 74). The permit sets what you may pour, not what insurance you carry.
Does TABC require liquor liability insurance?
Not under the code sections we reviewed. What Alcoholic Beverage Code 11.11 requires is a conduct surety bond: $5,000 for Chapter 25, 28 and 32 permit holders, and $10,000 for certain permits within 1,000 feet of a public school's property line. A certificate of deposit or letter of credit can stand in for it. The bond is forfeited to the state if the permit is revoked or a violation is finally adjudicated, and a holder with three years of continuous operation on the premises and no revocations in five years can renew without one.
The bond also falls away for most restaurants. A food and beverage certificate exempts the holder from 11.11, under Section 28.18 for mixed beverage permits and Section 25.13 for wine and malt beverage permits. TABC may issue the certificate to a restaurant, or to a location whose alcohol receipts are 60 percent or less of total receipts, as long as it has permanent food service facilities that prepare and serve multiple entrees on site. TABC's rule, 16 TAC 33.5, counts complimentary drinks toward alcohol sales and looks at the receipts of every business sharing the location.
Bills to make liquor liability insurance mandatory have been filed before; KUT reported in 2015 on one that would have applied to bars and restaurants earning at least half their revenue from alcohol. None of the code sections above contains such a requirement today. That does not make the coverage optional in practice. As our liquor guide explains, a standard general liability policy excludes liquor claims for a business that sells or serves alcohol, and leases commonly ask for a liquor limit. Aiden Risk does not sell surety bonds, so the conduct bond comes from a surety provider; liquor liability is insurance, and we place it.
The Texas Dram Shop Act and the seller-server safe harbor
Under Alcoholic Beverage Code 2.02, a provider is liable for selling or serving alcohol only if the customer was obviously intoxicated to the point of presenting a clear danger to themselves and others, and that intoxication was a proximate cause of the damages. Under 2.03, that is the exclusive cause of action against a provider for serving someone 18 or older. Separately, an adult can be liable for knowingly serving or allowing service to a minor under 18 who then causes harm.
Section 106.14 is the safe harbor. An employee's sale to a minor or an intoxicated person is not attributable to the employer if three things are true: the employer requires its employees to attend a TABC-approved seller training program, the employee actually attended, and the employer did not directly or indirectly encourage the violation. In 20801, Inc. v. Parker (2008), the Texas Supreme Court applied the safe harbor to a civil dram shop suit against a Harris County pool hall.
What the safe harbor does not do is where most guides stop short:
- It does not stop the lawsuit. Parker puts the burden of proving training and attendance on the business, and said encouragement may be shown, at minimum, by evidence of the provider's negligence. You still defend the case, which is what liquor liability pays for.
- It covers employees' sales, not the owner's choices. Drink specials, upsell pressure or a manager who keeps pouring are what a plaintiff uses to argue encouragement.
- It only covers trained staff. A new bartender who has not attended an approved program yet is outside it.
- It does not reach your own security. A bouncer's shove or a poorly lit parking lot is a premises or assault and battery claim, not a sale by a trained server; check the assault and battery exclusion on your GL and liquor policies.
Our liquor liability and dram shop guide covers pricing and the rules in Aiden's other 15 states.
The 51 percent sign
Under Government Code 411.204, a business holding a Chapter 25, 28, 32, 69 or 74 permit or license that derives 51 percent or more of its income from on-premises alcohol sales must post a sign at each entrance, in English and Spanish, with a red "51" at least five inches tall, stating that it is unlawful for a license holder to carry a handgun on the premises. A business with a food and beverage certificate is exempt. It is a firearms rule, but the same number matters to your insurance: the share of sales from alcohol is one of the main things liquor liability is priced on.
Commercial auto, delivery and catering in Texas
Any vehicle the business owns needs at least the state minimum under Transportation Code 601.072: $30,000 for bodily injury to one person, $60,000 for two or more people in one collision, and $25,000 for property damage. Those minimums have applied since January 1, 2011. They are a floor, not a recommendation; a single serious crash in a catering van can exceed them, and venue and catering contracts may require much higher limits.
The bigger gap for most restaurants is the cars they do not own. When a manager runs errands or a driver delivers in a personal car, the employee's own policy may exclude business use, and your business can still be sued. Hired and non-owned auto fills that gap; see our hired and non-owned auto guide. If you cater or run a truck, the food truck and catering insurance guide covers event certificates and owned vehicles.
What your lease, franchise agreement or venue contract may ask for
For most Texas restaurants, the binding insurance requirements sit in a lease, franchise agreement, loan or venue contract. Limits vary by contract, so here is what to look for in yours.
| What the contract may ask for | What to check in your documents |
|---|---|
| Commercial general liability | Per-occurrence and aggregate limits, and whether the aggregate must apply per location |
| Liquor liability | A stated limit, and whether a host liquor endorsement is enough (usually not if you sell alcohol) |
| Property, including tenant improvements and betterments | Who insures the build-out you paid for, and whether replacement cost is required |
| Business income | Months of coverage required, which sets how long rent keeps getting paid after a fire or storm |
| Workers' comp and employer's liability | Whether the lease or franchise agreement requires subscribing, regardless of state law |
| Umbrella or excess | The limit, and that it follows form over GL, liquor and auto |
| Additional insured | Who must be named (landlord, property manager, lender, franchisor) and whether the endorsement covers them for liquor liability as well as GL |
| Waiver of subrogation | Which policies it applies to; property and workers' comp waivers need their own endorsements |
| Primary and noncontributory | That the endorsement, not just the certificate, says so |
| Certificates of insurance | Due at signing, at every renewal, and before any event |
Each line has a known failure. A landlord named on the GL policy but not the liquor policy is the additional insured problem in restaurant form. A waiver on GL alone can fail the lease, as our waiver of subrogation guide explains. An umbrella that does not follow form over liquor liability may leave the biggest claims uncovered. Franchise agreements can add conditions of their own, such as minimum insurer ratings or certificate deadlines at each new opening, so read them location by location; see multi-location restaurant insurance.
Before you sign, use Aiden's COI checker: it grades your coverage from your answers about the contract and certificate and flags gaps like a missing additional insured or a short limit. Then have a broker read the actual clause. Our certificate of insurance guide walks through every box on the form.
Property, hail and coastal windstorm
No law requires a restaurant to insure its building or equipment, but lenders and landlords do, and Texas weather tests the policy.
Wind and hail deductibles
Check whether your property policy has a separate deductible for wind and hail, or for named storms on the coast, and whether it is written as a percentage of the insured value instead of a flat dollar amount. A percentage of a building's value can be far larger than the all-other-perils deductible on the declarations page. Find the endorsement, note the percentage and the trigger, and budget for it. Our named storm deductible guide explains the triggers in detail.
TWIA for Gulf Coast restaurants
In parts of the coast, private carriers may exclude wind and hail entirely. The Texas Windstorm Insurance Association (TWIA) is the market of last resort there. Its eligibility page lists 14 first-tier coastal counties, Aransas, Brazoria, Calhoun, Cameron, Chambers, Galveston, Jefferson, Kenedy, Kleberg, Matagorda, Nueces, Refugio, San Patricio and Willacy, plus the part of Harris County east of Highway 146. To qualify, the building must have a windstorm certificate showing it was built to applicable codes, the applicant must have been declined by at least one authorized insurer that writes wind and hail in the area, and certain properties in high-risk flood zones must show proof of flood insurance.
Know its limits. TWIA's policy page says TWIA covers only windstorm and hail damage to the property listed, by law no other perils, and does not cover flood. Its Q1 2026 fact book lists a maximum of $4,424,000 for commercial structures and associated contents, with data as of March 31, 2026. A coastal restaurant therefore needs three pieces working together: property for fire and other perils, TWIA or a private policy for wind and hail, and flood. Claims fall through the gaps between them. Our restaurant property insurance page covers how we put them together.
Spoilage and business income
A storm that knocks out power can cost more in spoiled inventory and lost sales than in repairs. Check that the policy includes spoilage, including off-premises power failure, and that business income runs long enough to cover a rebuild and the ramp back to normal sales. Our restaurant business income calculator gives an estimate, not a quote, of the limit to discuss with your broker.
Employment claims: wage and hour and EPLI
Texas adds no minimum wage of its own above the federal one. The U.S. Department of Labor's tipped minimum wage table (effective July 1, 2026) lists Texas at a $7.25 combined cash and tip minimum, a $2.13 minimum cash wage, and a maximum tip credit of $5.12. Tip credits, tip pools and overtime are where restaurant wage claims start.
Employment practices liability insurance (EPLI) covers claims like harassment, discrimination and wrongful termination. It usually does not pay wage and hour claims: most EPLI policies exclude them, and where coverage exists it is typically a defense-cost sublimit. Our guide to restaurant wage and hour claims and EPLI covers what is covered and what is not. For the other policies Texas restaurants often skip, see restaurant insurance coverage gaps.
How Aiden Risk Solves Each of These Problems
Texas leaves most decisions to the owner, so most mistakes are quiet ones: a nonsubscriber notice never filed, a lease clause nobody read, a liquor policy missing the landlord. Aiden Risk is an AI-native independent commercial insurance broker that pairs an AI risk engine built for commercial insurance, which analyzes 140+ signals about a business, with a licensed broker on every account.
| The problem | How Aiden Risk solves it |
|---|---|
| Deciding whether to subscribe to workers' comp or stay a nonsubscriber | Your broker advises on coverage options and limits and shops 100+ carriers, including surplus lines. Aiden Risk gives no legal advice; plan documents go to your employment counsel. |
| A lease or franchise agreement that requires comp, additional insured or waiver of subrogation | Your broker reviews the insurance clauses in your lease and franchise agreement with you, confirms the endorsements are on each policy, and issues certificates that match. |
| Assuming general liability covers alcohol | A coverage gap analysis before binding checks your liquor liability, its assault and battery terms, and the landlord's additional insured status. |
| Alcohol sales crossing into bar territory | Our AI monitors your risk year-round, and a licensed broker acts on every change it flags, such as a shift in your alcohol share that changes how carriers rate you. |
| Delivery and errand driving in employees' cars | Your broker reviews how vehicles are used and advises on hired and non-owned auto and owned-auto limits above the 30/60/25 minimum. |
| Coastal wind, hail and flood gaps | Your broker coordinates property, wind and flood, reviews deductibles and triggers with you, and checks business income and spoilage limits. |
| Wage and hour exposure | Your broker reviews EPLI terms and exclusions with you and negotiates with carriers on the wording. |
| Needing the TABC conduct bond | Aiden Risk does not sell surety bonds; you get the bond from a surety provider while we handle the insurance. |
Aiden Risk charges no fee to work with it, with no platform fee or subscription; it is paid through standard carrier commissions. We place coverage across 100+ carriers and 13 commercial lines, including restaurant general liability and the rest of a restaurant insurance program. Intake takes 5 minutes, and most straightforward businesses are placed in as little as 48 hours. Texas is one of the 16 states where we are licensed, listed on our licenses page.
Key Takeaways
- Texas does not require private restaurants to carry workers' comp, but nonsubscribers must file DWC Form-005 yearly and notify every employee.
- A nonsubscriber sued by an injured employee cannot argue contributory negligence, assumption of risk or a coworker's fault, and pre-injury waivers are void.
- TABC requires a $5,000 conduct surety bond (more near schools) for some permits, not liquor liability insurance, and a food and beverage certificate removes the bond.
- The 106.14 safe harbor protects you from employees' sales when trained staff were not encouraged to over-serve; it does not stop a lawsuit or cover fights and premises claims.
- Owned vehicles need at least $30,000 / $60,000 / $25,000 of liability; delivery in employees' cars needs hired and non-owned auto.
- Leases, franchise agreements and venue contracts set most real requirements; coastal locations need property, wind (often TWIA) and flood working together.
- Aiden Risk pairs AI that monitors your risk year-round with a licensed broker who reviews your lease and contracts, runs a gap analysis before binding, and issues certificates that match.
FAQs
Do restaurants need insurance in Texas?
State law requires little: auto liability on owned vehicles and, if you skip workers' comp, the nonsubscriber filings and notices. Landlords, lenders, franchisors and venues usually require general liability, property, liquor liability if you serve alcohol, and often workers' comp.
Is workers' comp required in Texas for restaurants?
No. Labor Code 406.002 makes coverage elective for private employers. A restaurant that opts out must file DWC Form-005 annually, tell every employee in writing and by a posted notice, and loses the contributory negligence, assumption of risk and fellow-employee defenses if an injured employee sues.
Does TABC require liquor liability insurance?
Not under the code sections we reviewed. Alcoholic Beverage Code 11.11 requires a $5,000 conduct surety bond for several permits ($10,000 near a public school), and a food and beverage certificate exempts you. Landlords and venues commonly require liquor liability by contract.
What is the Texas dram shop safe harbor?
Under Alcoholic Beverage Code 106.14, an employee's sale to a minor or intoxicated person is not attributed to the employer if the employer requires TABC-approved seller training, the employee attended, and the employer did not encourage the violation. It applies in civil suits, but the business must still prove training in court.
What are the Texas minimum auto insurance limits for a restaurant vehicle?
Transportation Code 601.072 sets $30,000 per person and $60,000 per collision for bodily injury, and $25,000 for property damage. Employees driving their own cars on your business need hired and non-owned auto on your side.
Does TWIA cover a restaurant on the Texas coast?
TWIA writes wind and hail coverage for commercial buildings and contents in 14 coastal counties and part of Harris County, if the building has a windstorm certificate and a private insurer has declined it. It does not cover flood or other perils.
Opening in Texas, renewing a lease, or deciding whether to subscribe to workers' comp? Start with our restaurant insurance page: a 5-minute intake, a licensed broker on your account, and coverage matched to what Texas law and your contracts actually require.
