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Buy Workers’ Comp Insurance in Texas: Everything You Need to Know

Workers’ compensation is an insurance program that is mandated by the government to provide workers who have gotten sick or been hurt on the job, or because of the job, with benefits. Workers’ comp programs in the US are largely overseen by the individual states. 

If you live and work in Texas, you’ll want to be aware of the workers’ compensation regulations for that state. We’ve compiled a comprehensive guide for the things you should know about workers’ compensation in Texas. 

How does workers’ comp function in Texas?

The workers’ compensation system in Texas is administered by the Division of Workers’ Compensation. Insurance companies, or employers who have been certified as self-insured, pay the benefits for an employee’s workers’ compensation claim. 

Is workers’ compensation insurance required in Texas?

Unlike many other states, Texas does not require most employers to have workers’ compensation insurance coverage. If a business chooses not to have workers’ comp insurance coverage, they risk personal injury lawsuits if an employee gets hurt on the job. Opting to carry the insurance coverage limits the amount of compensation injured employees can receive. Texas law sets those limits.

There are a few exceptions as to who is required to carry the coverage. Those required to provide workers’ compensation insurance in Texas include: 

  • City, county, state agencies, and any other public employer
  • Government contractors
  • Universities run by the state
  • Construction or building contractors who contract with the government
  • Bus companies
  • Carriers that provide transportation over public highways
  • Those who deal in liquid propane gas or compressed natural gas
  • People who employ inmates on work furlough

What benefits does workers’ comp insurance provide in Texas?

In Texas, workers’ compensation pays the following benefits: 

  • Medical treatment. The insurance company pays the provider, and the employer is required to let the employee know if they must go to specific in-network providers.
  • Income benefits are a way to replace a portion of the employee’s lost wages. The amount the employee receives is based on the 13 weeks before the lost time. It’s the employer’s responsibility to report these wages to the insurance company, which then pays the benefits. There are four types of income benefits in Texas.
    • Temporary income benefits are paid when a worker has missed more than seven days due to injury or illness. They don’t have to be consecutive days missed. This benefit pays between 70 and 75 percent of the worker’s weekly salary. The benefit ends when the worker returns to work at full salary or meets the clinical (the doctor says no more healing is expected) or statutory (104 weeks from the initial injury or illness) maximum for medical improvement. 
    • Impairment income benefits are for workers who have sustained a permanent injury on the job. This benefit pays 70% of the employee’s regular weekly salary. An employee can receive this benefit even if they can return to work. The amount of the benefit over time is determined by a rating given by the doctor. Each point on the scale equals three weeks of benefit payments. 
    • Supplemental income benefits are for those workers who sustained a permanent injury and have either not been able to return to work or are making less than 80% of what they made before the injury. The employee will not receive this benefit if they accepted a lump sum payment as a settlement for their claim. 
    • Lifetime income benefits are for employees with serious injuries such as brain injuries, blindness, or loss of multiple limbs. This benefit pays 75% of the worker’s previous salary and provides a cost-of-living increase of 3% each year. It’s the only income benefit without a time limit.
  • Death and burial benefits are paid to the family members of employees who died on the job. This benefit will pay 75% of the lost salary and will pay up to $10,000 of funeral expenses.

How can I purchase workers’ compensation insurance in Texas?

There are four ways to provide workers’ compensation insurance in Texas: private insurance companies; brokers or agencies; the state fund; and lastly self-insured

Buy workers comp insurance in Texas through private insurance companies

There are hundreds of private companies offering workers comp insurance in Texas. A few popular names are like Hartford, Employers, Liberty Mutual, or Chubb

  • Pros: You can shop for rates and coverage that works for your budget.
  • Cons: All companies may not be good for your business type. Some are more geared toward corporations, while others are better for independent shops. 

Buy workers comp insurance in Texas through digital brokers or agencies

There are also many brokers and agencies offering workers comp insurance in Texas. If you want to work with digital brokers or agencies, ie. you can get quotes and buy policies completely online, here are a few popular ones: CoverWallet, Policy Sweet,, or Simply Business

  • Pros: You can compare several quotes from several insurance companies easily and conveniently. Managing your policy after purchase is also easy through digital dashboards.
  • Cons: If you prefer a particular carrier and the broker you work with doesn’t partner with that carrier. You are out of luck.

Buy workers comp insurance in Texas through the state fund

Texas Mutual Insurance Fund is the state fund, but it operates like a private company.

  • Pros: Largest market in the state; they cover some of the riskier businesses that others won’t cover.
  • Cons: Considered the last resort for purchasing a workers’ comp policy

Self-insure workers comp insurance in Texas

  • Pros: You cover benefits yourself. 
  • Cons: The requirements make this doable only for large corporations with high overhead.

Learn more at the best workers comp insurance companies in Texas

What if I don’t have required workers’ comp insurance in Texas?

Workers’ compensation insurance isn’t a required benefit for private companies in Texas. However, if you choose not to carry workers’ comp insurance you are risking lawsuits if employees get injured on the job. Nonsubscribers (businesses without workers’ compensation insurance) must report to the state and post annually that they don’t carry the insurance. If a nonsubscriber gets sued they cannot claim that the employee got injured due to their own negligence. 

What do employers need to know about Texas workers’ comp law?

These are the key takeaways that employers need to understand about Texas workers’ compensation laws.  

  1. Private employers are not required to provide workers’ compensation insurance, but if they opt out they have to notify their employees of that decision.
  2. Public employers and government contractors are required to provide workers’ compensation coverage. 
  3. There is a one-year statute of limitations for workers’ compensation claims, but an employee is responsible for notifying the employer of an injury at work within 30 days of that injury. 

Who pays for workers’ compensation insurance in Texas?

Employers who opt to provide workers’ compensation insurance pay the premiums for the coverage based on the payroll and risk factor of their company. Those who opt to self-insure must complete paperwork with the DWC (Division of Workers’ Compensation) and be prepared to pay any claims for workers’ compensation. 

How are workers’ comp disputes handled in Texas?

In Texas, the Texas Department of Insurance’s Division of Workers’ Compensation (DWC) handles disputes. Here are the steps for handling a dispute.

  • Speak to an attorney or your ombudsmen about the dispute.
  • Speak to the adjuster for your insurance carrier about your dispute. 
  • Go to a benefit review conference (BRC).
  • Next is a contested case hearing or arbitration.
  • If you don’t like the outcome of the hearing or arbitration, you can appeal to the Appeals Panel.
  • If you don’t like the outcome of your appeal, you can appeal in court for a judicial review of your case. 

How are workers’ compensation claims made in Texas?

Employees should notify their employer as soon as possible after a work-related illness or injury occurs. In this notification, they should include as many details as possible, including where the incident occurred, what exactly happened, what caused the incident, and who—if anyone—saw what happened. After being notified, the employer then files the First Report of Illness or Injury with the insurance company and forwards that to the DWC. Then, employees are responsible for completing (or having a medical provider complete) any paperwork they receive regarding their claim as well as for returning it to the proper person within the time limits. 

How much does workers’ comp insurance cost in Texas?

The cost of workers’ compensation insurance is based on the riskiness of the job and the payroll of the company. The average cost in Texas is 55 cents for every $100 of payroll. There is a formula for calculating the cost you will pay based on codes assigned for risk factors of the jobs. 

Different companies will offer you different quotes. Be sure to shop around with a few companies or with a broker to compare several quotes before making your final decision.

Learn more how to calculate the cost of workers comp insurance

How do I find cheap workers’ comp insurance in Texas?

The easiest way to find cheap workers’ compensation insurance in Texas is to compare rates for various companies online, or by contacting an agent. 

Learn more at the cheapest workers comp insurance companies.

Final thoughts

Texas is the one state in the United States that doesn’t require private businesses to provide workers’ compensation insurance. Public businesses like city or state agencies as well as government contractors must provide workers’ compensation for their employees. The cost of premiums is based on the risk factors of the business and the payroll.

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