Texas Workers' Compensation Insurance

Your Guide to Workers' Comp Insurance in Texas

How to find the right workers' compensation insurance for you.

Texas Workers Compensation Insurance

Over the past few years, Texas businesses have paid out $658.13 million in workers' comp claims. From simple slips to severe illnesses, workplace incidents happen frequently. Having the right workers' comp coverage can help protect your business from employee injuries and illness on the job. 

Fortunately the right workers' comp coverage can also guard your business from financial liabilities and lawsuits in case of such an incident. For help navigating workers comp insurance coverage, find a local independent agent today.

Workers' Compensation Coverages/Non-Coverages in Texas

Workers' comp helps employees pay for medical bills if they get injured or ill on the job. But this coverage also protects employers from lawsuits stemming from employee illnesses and other unexpected costs.

Here's a closer look at what workers' comp covers and excludes in the state of Texas.

Workers' comp covers the following:

  • Certain mental illnesses and injuries
  • Occupational diseases
  • Repetitive motion-related injuries
  • Traumatic injuries

Here's a real-life example of coverage:

A Texas ranch operator gets injured by a disgruntled horse while performing routine duties. The worker needs immediate medical care for their wounds. Workers' comp would pay for related treatments and other expenses.

Workers' comp does not cover:

  • Intentional employee injuries and malicious acts
  • Employee illnesses or injuries occurring outside of work
  • Accidents that occur when an employee is intoxicated
Workers' Compensation Coverage Covered Not Covered
Traumatic injuries
Covered by Worker's Compensation
Repetitive-type injuries
Covered by Worker's Compensation
Certain mental injuries
Covered by Worker's Compensation
Occupational diseases
Covered by Worker's Compensation
Employee illnesses or injuries sustained outside of work
Not covered by Worker's Compensation
Accidents that occur while an employee is intoxicated
Not covered by Worker's Compensation
Intentional employee injuries to themselves at the workplace
Not covered by Worker's Compensation

An independent insurance agent can further explain what workers' compensation covers and excludes in Texas, specifically.

Why Do You Need Workers Compensation Insurance in Texas?

Workers' comp is usually required by state law. Coverage protects businesses with employees from financial losses if a worker sustains an injury or illness while performing workplace duties. 

Coverage is often necessary right when your business hires a new employee. It's important to have a policy in place before workers even start job duties, just in case of disaster. Coverage will protect your business from being financially responsible for employee injury or illness.

What Consequences Could You Face if You Don’t Have Workers’ Compensation in Texas?

Texas is an exception, because unlike most states, it does not require employers of any size to carry workers' comp coverage. However, coverage is always highly encouraged if your business has employees. 

Without coverage, your business is vulnerable to employee lawsuits if there's an injury or illness on the job. An employee's family can also sue your business for the incident, if you lack coverage.

What Are Texas Workers' Compensation Laws?

Texas is the only state that doesn't require employers to carry workers’ compensation. Approximately 30% of all businesses in this state take advantage of this rule and forego coverage.

Those who opt out of coverage are referred to as “non-subscribers.” Texas workers’ compensation laws mandate that non-subscribers must post notices about the lack of coverage in the workplace and inform employees right away that they're not covered by workers' comp.

If an injured employee sues a non-subscriber business, the business cannot argue that the injury was caused by  employee negligence or that the worker was aware of the danger and voluntarily accepted it. Business that opt to forego coverage open themselves up to costly lawsuits related to worker injuries. 

How Much Does Texas Workmans' Comp Cost?

Texas bases their workers’ compensation rates on the classification codes and risk ratings as determined by the National Council of Compensation Insurance (NCCI). Base rates in this state are often higher than in most other states, largely because so many businesses opt out of purchasing coverage.

Consider the following example:

  • Premium: $100,000 
  • Mod: 0.95 (5% premium credit)
  • Premium with mod credit applied: $95,000
  • Premium: $100,000
  • Mod: 1.0 
  • Premium is not adjusted
  • Premium: $100,000 
  • Mod: 1.05 (5% premium surcharge/debit)
  • Premium with mod debit applied: $105,000

Many employers in Texas have workers with more than one classification. These classifications and associated premiums are combined to determine the business's annual workers’ comp premium.

Texas Workers’ Compensation Base Rate Examples

Workers’ compensation costs are much higher in Texas than the national average. The NCCI sets a base rate for each Texas class code, but rates vary by insurance company underwriting standards. 

Consider the following sample base rates (rate per $100 of employer payroll):

  • 0042 Landscaping: $5.68
  • 5183 Plumbing: $5.01
  • 5551 Roofing: $14.41
  • 8017 Retail Store: $2.72
  • 8810 Clerical: $0.23
  • 9079 Restaurant: $2.25
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Workers' Comp Cost Per Employee in Texas

Businesses with more employees and higher payrolls pay more for coverage as they are costlier for insurance companies to insure. Here's a closer look at how workers' comp costs vary by payroll range in each specific industry below.

Annual Workers' Comp Cost Per Employee

Industry Lower Cost Medium Cost Upper Cost
Construction $1,632 $3,126 $11,962
Finance and Insurance $537 $970 $3,550
Hotels / Motels $394 $885 $3,739
Manufacturing and Food Production $697 $1,325 $5,039
Professional and Technical Services $504 $998 $3,905
Real Estate $91 $181 $707
Restaurants and Taverns $160 $357 $1,501
Retail Trade $308 $590 $2,259
Transportation and Warehousing $1,202 $2,367 $9,226

On the other hand, businesses with a greater track-record of safety and fewer accidents pay less for their coverage. Insurance companies use complex formulas to reset your rates after an accident, which often leads to a large spike in your premiums.

Best Workers' Comp Companies in Texas

Workers' comp is available from a wide range of insurance companies in Texas. Here are just a few of our top picks for quality workers' comp insurance carriers.

Top Workers' Compensation Insurance Companies Star Rating
5 star rating
Liberty Mutual
4.5/5 star rating
Builders & Tradesmen's Insurance
4.5/5 star rating
5 star rating
EMC Insurance Companies
5 star rating
ICW Group
4.5/5 star rating

An independent insurance agent can help you look into these workers' comp insurance companies and get matched to the carrier who best meets your needs at the most affordable rate.

Top 6 Most Common Workers' Comp Claims/Injuries

Top 6 Most Common Workers Comp Claims
  1. Lacerations: Deep cuts happen most often to workers in the restaurant and manufacturing fields, but can affect anyone. 
  2. Sprains/strains: Sprains and strains happen most often to workers who are required to twist and turn to perform job place duties.
  3. Contusions: Bruises and other skin marks caused by impact often happen due to collisions with items, improper lifting techniques, or dropped items.
  4. Burns: Burns often happen to restaurant, bakery, and construction employees, but can occur in any industry that uses heat.
  5. Eye injuries: Eye injuries are especially prevalent in industries that require chemicals, including manufacturing, painting, and construction.
  6. Fractures: Fractures can happen to employees anywhere, but are most prevalent in industries that require a lot of movement and the use of heavy machinery.

Why Are Independent Insurance Agents Awesome?

It’s simple. Independent insurance agents simplify the process by shopping and comparing insurance quotes for you. Not only that, but they’ll also cut the jargon and clarify the fine print, so you know exactly what you’re getting.

There’s no business too small for our independent insurance agents. They have access to multiple insurance companies, ultimately finding you the best workers' comp coverage and competitive pricing while working for you.

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TrustedChoice.com Article | Reviewed by Paul Martin

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