For business owners navigating insurance requirements in the Lone Star State, one common question is: Is workers’ compensation insurance required in Texas? The answer isn’t as straightforward as in other states, and understanding the legal landscape is key to protecting both your business and your employees.
At Steve White Insurance, we help Texas business owners find clear answers and smart coverage solutions. This post explores how workers compensation insurance works in Texas and what business owners need to consider.
Is Workers Compensation Insurance Mandatory in Texas?
Texas is unique when it comes to workers’ compensation insurance requirements. Unlike most states, Texas does not require private employers to carry workers compensation insurance. This makes Texas the only state where coverage is optional for most employers.
However, that doesn’t mean businesses can forgo it without risk. Opting out means taking full financial responsibility for any employee injuries that occur on the job. Employers who do not carry workers compensation insurance can be sued directly by injured employees—and without the legal protections that coverage provides.
It’s important to know that some employers are required to carry workers’ comp, especially those who work on government contracts. Public employers, including state agencies and public universities, are typically required to provide coverage.
What Happens If a Texas Employer Chooses Not to Carry Coverage?
Employers who opt out of workers compensation insurance are known as non-subscribers. Non-subscribers are not shielded from lawsuits the way covered employers are, and they may be held liable for damages in court.
Without workers compensation insurance, Texas employers may face:
- Personal injury lawsuits from employees
- Legal expenses for defending claims
- Potentially large settlements or judgments
- Reputational harm or loss of employee trust
To remain in compliance, non-subscribing employers must file annual notice with the Texas Division of Workers’ Compensation (DWC) and report any workplace injuries.
What Benefits Does Workers Compensation Insurance Provide?
Workers compensation insurance in Texas can help cover a variety of costs related to workplace injuries or illnesses. These typically include:
- Medical expenses for treating injuries
- Partial wage replacement during recovery
- Rehabilitation or retraining services
- Death benefits for families in the event of a fatal injury
By carrying workers comp, employers may also gain legal protections. If an employee is injured and accepts workers comp benefits, they typically waive their right to sue the employer for negligence.
Keep in mind that coverage details and limits vary by policy, and it’s important to work with an experienced agent, like those at Steve White Insurance, to ensure your business has the protection it needs.
Are There Any Exceptions or Special Rules?
Yes. Texas has specific rules for certain types of employers and industries. For example:
- Construction companies working on public projects are often required to carry workers comp.
- Contractors may need to prove they have coverage to qualify for jobs.
- Transportation companies with drivers crossing state lines might be subject to other state requirements.
Also, while workers compensation may be optional for private employers, carrying a policy may be required by clients, vendors, or industry regulations. Many businesses in Texas choose to carry workers compensation as a safeguard and a competitive advantage.
How Can a Texas Business Decide Whether to Carry Workers Comp?
The decision to carry workers compensation insurance should be based on your industry, employee risk level, and long-term business goals. Consider these questions:
- Does your business operate in a high-risk industry (construction, manufacturing, transportation)?
- Would a workplace injury cause a financial burden?
- Can your business afford to defend against lawsuits or pay out-of-pocket for medical claims?
- Do your clients or contracts require proof of coverage?
At Steve White Insurance, we work closely with Texas businesses to help them evaluate their risks and explore available coverage options. Even if your business is not required by law to carry workers compensation insurance, it may be a smart investment in your company’s future.
How Do You Get Workers Compensation Insurance in Texas?
Texas employers can obtain workers comp coverage in a few different ways:
- Private insurance carriers licensed in Texas
- Texas Mutual Insurance Company, the state’s largest workers comp provider
- Self-insurance, which is available to large companies who meet financial and regulatory requirements
Working with an independent agency like Steve White Insurance gives you access to multiple options. We can compare rates, help you understand your obligations, and make sure your policy fits your business’s size, risk, and budget.
What If You Already Have Other Business Insurance?
Workers compensation insurance is not automatically included in a standard business owners policy (BOP). While your general liability insurance protects against third-party claims (like customer injuries), it does not cover injuries to your employees.
If you’re unsure whether you currently have workers comp coverage, it’s a good idea to review your policy. Our team at Steve White Insurance can help assess your current insurance and identify any gaps that might leave your business exposed.
Ready to Explore Workers Compensation Options?
Navigating the rules around workers compensation insurance in Texas can be challenging, but you don’t have to do it alone. Whether you’re a startup weighing the pros and cons of non-subscription or an established business ready to add a policy, Steve White Insurance is here to help.
We’ll guide you through your options and help you make an informed decision that aligns with your goals and responsibilities as a Texas employer. Contact Steve White Insurance today to get started on your Texas workers compensation insurance quote or schedule a consultation with one of our experienced agents.
