Texas handles workers’ compensation insurance differently than other states. Private companies can choose to skip coverage. But that choice comes with major risks—especially for small businesses in construction, farming, and trucking.
This guide explains who needs coverage, what the law says, what gets covered, costs, and how claims work.
WHO NEEDS THIS COVERAGE
Most private employers in Texas can choose whether to buy workers’ compensation insurance. The exception is private companies working on government projects—they must have coverage for their workers on those jobs.
Required coverage:
- Government employers: All city, county, and state workers must be covered
- Government contractors: If you bid on or work public projects, you must have coverage per construction workers comp requirements TX
Some industries choose coverage anyway: Farms skip by default but often buy coverage because of seasonal workers and high injury rates during harvest
If you skip coverage (called Texas non-subscriber workers’ comp): You must tell workers and the Division of Workers’ Compensation. You also lose legal protection from injury lawsuits. One workplace accident could mean six-figure court costs with no insurance help.
KEY BENEFITS & COVERAGE DETAILS
Texas workers’ comp insurance gives several key benefits that protect your workers and your business:
Medical benefits: Pays for all needed medical care related to work injuries—from emergency room visits to long-term physical therapy.
Income benefits come in four types:
- TIBs (Temporary Income Benefits): Short-term wage replacement
- IIBs (Impairment Income Benefits): Payments based on disability rating
- SIBs (Supplemental Income Benefits): Extra help for serious disabilities
- LIBs (Lifetime Income Benefits): Permanent payments for worst injuries
Job retraining: Helps hurt workers return to work through training or modified jobs.
Death benefits: Money and funeral costs for families if a worker dies on the job.
This type of policy protects employers from surprise costs while giving hurt workers faster access to care. It also gives access to approved doctor networks—cutting downtime and improving recovery. For blue-collar workers’ comp Texas in industries like oilfield services or shipping, this protection matters because of high physical demands and exposure risks.
COMMON CLAIMS & REAL SCENARIOS
The most frequent claims filed through the Texas system come from workplace dangers that can be predicted—but still cause damage:
Lifting injuries and repetitive motion strain: The top cause of claims. Back injuries from lifting heavy items or repetitive motions like typing.
Slips, trips, and falls: Second most common. Wet floors, uneven surfaces, or cluttered walkways cause these accidents.
Equipment accidents: Machinery contact or mishandling equipment causes cuts, crushes, and amputations.
Car accidents during work: A delivery driver in an accident could lead to significant claims.
Texas environment makes risks worse: Summer heat waves increase dehydration dangers across outdoor worksites. Fast commercial growth puts more construction crews at risk daily.
If you’re uninsured: Even one serious accident can destroy your business financially and legally.
Want a simple breakdown of how workers’ comp works? Read our guide: Workers’ Comp Insurance Basics – What You Should Know.
COSTS & STATE SPECIFICS
The cost of coverage in Texas is among the lowest in the country—but changes based on your business type and risk level.
Average statewide rate: Varies significantly by industry classification and risk level
Cost factors:
- Industry type code
- Past claims history
- Total payroll size
- Safety procedures you use
Higher risk jobs pay more: Roofing contractors pay more than office workers because of increased injury chances.
Ways to lower costs:
- Install safety systems
- Offer return-to-work programs
- Make sure workers are classified correctly (wrong classification can be fraud)
Compared to nearby states: Oklahoma requires workers’ comp no matter what—making it key to understand local rules if you expand.
Bottom line: It’s almost always cheaper than paying hospital bills yourself after one serious accident.
CLAIMS PROCESS & LEGAL REQUIREMENTS
The Division of Workers’ Compensation has strict deadlines—and missing them creates costly penalties or delays in benefit payments.
Injury reporting deadline: Workers must report workplace injuries within 30 days of when they happen.
Claim filing deadline: The formal claim must be submitted within one year using required state forms.
Texas employer workers’ comp rules for disputes:
- First step is benefit review conference
- If no agreement, formal hearing with judge
- Appeals can go to higher courts
If you’re a non-subscriber: You don’t get access to this organized dispute system—and face full liability if sued.
State enforces accuracy through audits and penalties:
- Wrong information leads to fines and penalties
- Poor handling harms workers and exposes owners personally
REGULATORY OVERSIGHT & AUTHORITY
The Texas Department of Insurance, Division of Workers’ Compensation (DWC) regulates the entire workers’ compensation system in Texas. DWC handles:
- Certifying self-insured employers
- Overseeing dispute resolution processes
- Monitoring compliance and conducting audits
- Setting medical fee guidelines and treatment standards
- Regulating insurance carriers and health care networks
The workers’ compensation laws are found in Texas Labor Code, Title 5, which establishes the legal framework for coverage requirements, benefits, and procedures.
ALTERNATIVE COVERAGE OPTIONS
Beyond traditional insurance, Texas offers two additional coverage methods:
Self-Insurance: Large employers can self-insure their workers’ compensation claims with DWC approval. Self-insured employers pay claims directly but must meet strict financial requirements and maintain proper reserves.
Health Care Networks: Employers can choose coverage through certified workers’ compensation health care networks. These networks provide managed care through contracted doctors and hospitals, often reducing costs while ensuring quality treatment. The Texas Department of Insurance certifies all workers’ compensation networks.
Both options require regulatory approval and ongoing compliance monitoring.
BOTTOM LINE & EXPERT RECOMMENDATIONS
Your choice about Texas workers’ comp insurance isn’t just about following rules—it’s smart protection against business disruption, debt, and disaster.
Key facts to consider:
- One serious accident could cost tens of thousands of dollars
- Lawsuit exposure without workers’ comp is unlimited—even emotional distress damages apply
- Buying coverage protects against loss AND gives access to experienced claims handling during crises
What we recommend:
- Look at your industry’s specific risks
- Compare costs of coverage vs. potential lawsuit costs
- Don’t wait—get covered before accidents happen
Take action now:
Call our experts: 855-718-7552 for help understanding Texas workers’ comp insurance options.
Your future success and cash flow may depend on today’s choice!
