By Priya Raman · Updated October 3, 2026 · 7 min read
Short answer
TDLR requires Texas ACR contractors to carry commercial general liability insurance and to file proof with the agency. Commonly cited minimums are $300,000 per occurrence, $600,000 aggregate and $300,000 products and completed operations for Class A, and $100,000 per occurrence, $200,000 aggregate and $100,000 for Class B. The rule is 16 TAC Section 75.40; confirm the current amounts and form on the TDLR site before buying coverage.
Texas requires air conditioning and refrigeration (ACR) contractors to carry commercial general liability insurance and to keep proof of it on file with the Texas Department of Licensing and Regulation (TDLR). The minimum amounts depend on the license class. Commonly cited figures are $300,000 per occurrence, $600,000 aggregate and $300,000 products and completed operations for a Class A license, and $100,000 per occurrence, $200,000 aggregate and $100,000 products and completed operations for Class B. The governing rule is 16 Texas Administrative Code Section 75.40 (Contractor Insurance Requirements). This is general information, not legal or insurance advice. The partial rule text we could read confirms the Class A products and completed operations figure, and the other amounts come from secondary sources, so check the current rule and TDLR’s certificate form before you rely on them.
Why does TDLR require insurance?
The insurance requirement is a financial responsibility rule. It exists so that a customer or third party who is harmed by an ACR contractor’s work (property damage, injury, a fire from faulty work) has a source of payment. TDLR treats continuous coverage as a condition of keeping the license active. A lapse can put the license in jeopardy even if the rest of the file is in order.
What are the minimums by license class?
| Coverage | Class A (TACLA) | Class B (TACLB) |
|---|---|---|
| Each occurrence (bodily injury and property damage) | $300,000 | $100,000 |
| General aggregate | $600,000 | $200,000 |
| Products and completed operations aggregate | $300,000 | $100,000 |
| Scope of equipment | No size limit | Cooling up to 25 tons, heating up to 1.5 million BTU/h |
The table reflects figures reported consistently across secondary sources and partial rule text. TDLR’s official wording is the controlling source. Compare it with the current text of 16 TAC 75.40 and with the instructions on the certificate of insurance form (ACR-LIC-009 at the time of writing).
A contractor who holds both a Class A and a Class B license may be able to use one policy if it meets the higher (Class A) minimums, according to secondary sources. Ask TDLR to confirm.
What does each coverage term mean?
- Per occurrence limit. The most the insurer pays for a single incident.
- General aggregate. The most the insurer pays for all claims during the policy period.
- Products and completed operations. Coverage for damage that arises after the work is finished and the contractor has left the site. For a chiller or compressor installation, this is the coverage that responds if a failure months later is traced to the contractor’s work. It is often the most important coverage for refrigeration and process-cooling contractors.
These minimums are floors. A contractor working on large industrial plants, data centers or food-processing facilities often finds that building owners and general contractors require limits far above the TDLR minimums, along with additional-interest endorsements and waivers of subrogation. Those are contract terms, not TDLR rules, and they vary by project.
How do you prove insurance to TDLR?
TDLR uses a certificate of insurance (COI) form for ACR contractors. In general:
- The contractor asks an insurance agent or insurer for coverage that meets the class minimums.
- The agent or insurer completes TDLR’s certificate form (ACR-LIC-009 or its current version), identifying the license holder or company, the policy number and the limits.
- The certificate is submitted to TDLR with the license application or when coverage changes or renews.
- The contractor keeps coverage in force and sends a new certificate when the policy renews or changes.
The details, such as who must sign the certificate and whether the insurer must be authorized in Texas, are on the TDLR form and the rule. Read them before you buy a policy.
What happens if coverage lapses?
A lapse in required insurance can lead to administrative action, which can include penalties or license suspension, as described on TDLR’s penalties and sanctions page. Because the license belongs to a person and the company works under it, a coverage gap also puts the company’s ability to offer ACR work at risk. Read TDLR inspections and complaints for how enforcement works.
How does insurance relate to the other license requirements?
Insurance is one piece of the licensing file. The others are experience, the exam, the application and fee, and annual renewal with continuing education. The sequence is described in how to get a Texas Class A ACR license. The class also determines the kind of equipment you can work on; see Texas ACR license types: Class A vs Class B and Texas ACR endorsements explained.
What other insurance do ACR contractors usually carry?
Beyond TDLR’s general liability minimums, companies in this field commonly look at several other lines. None of the following is required by TDLR as far as the sources we read show, but they come up in customer contracts and in business valuations:
- Workers’ compensation. Texas is unusual because private employers can choose whether to carry it, but many commercial customers require it. Check Texas Department of Insurance guidance and contract terms.
- Commercial auto. Service vehicles and trailers.
- Pollution or environmental liability. Relevant to refrigerant releases, oil spills and ammonia systems. See ammonia refrigeration system basics.
- Umbrella or excess liability. Raises limits above the primary policy, often requested by large customers.
- Professional liability. For design-build or engineering-related work.
- Equipment and tools coverage. For gauges, recovery equipment and rental units.
Buyers of a small HVAC company usually review the seller’s coverage history and claims record as part of due diligence. The topic appears in how to value an HVAC business.
What should you check before buying a policy?
- The current text of 16 TAC 75.40 and the TDLR certificate form.
- That the policy limits meet the minimum for the license class, with products and completed operations included.
- That the certificate identifies the right license holder or company name.
- Policy exclusions that matter for refrigeration work, such as refrigerant pollution, mold or work above a certain height.
- Customer contract requirements, which may be stricter than TDLR’s.
- The renewal date, and a reminder to file the new certificate before the old one expires.
An insurance broker who works regularly with Texas HVAC contractors is the right person to confirm the details.
Frequently asked questions
Does the insurance belong to the person or the company?
The license belongs to an individual, and the company works under it. The policy is typically issued to the business, and the certificate identifies how the coverage relates to the license. Ask TDLR or your broker how to fill out the form for your structure.
Do technicians need their own TDLR liability policy?
Generally, no. The insurance requirement applies to contractor licenses. Technicians working under a contractor’s license are covered by the contractor’s arrangements. Confirm with TDLR for your situation.
Where do I find the official table?
TDLR’s ACR contractor pages and the text of 16 TAC 75.40 give the official amounts. The certificate form lists the minimums too. If the numbers in this article differ from the current official text, the official text controls.
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