Texas Workers' Compensation Guide
Everything you need to know about workers' comp requirements, exemptions, and typical costs in Texas. Coverage becomes required at your first employee.
All
employee threshold
Competitive
0.85x
vs national median
Optional
When Is Coverage Required?
In Texas, workers' compensation insurance is required once you have any employee at all.
Sole proprietors and partners: Not automatically required — you can typically opt in through an endorsement to protect yourself against workplace injury.
Independent contractors: Not covered under your policy if properly classified. Misclassification is a common audit finding — the auditor may add contractor payroll to your workers' comp policy if they don't have their own certificate of insurance.
Where to Buy Coverage
Texas is a competitive-market state. You have several options:
- Private carriers: The Hartford, Travelers, Zurich, Liberty Mutual — larger insurers with agent networks.
- Direct online: NEXT Insurance, Pie Insurance, Hiscox — modern insurtechs, often faster and cheaper for small businesses.
- State fund: Some states also have a state fund as a competing option — usually assigned-risk pool for hard-to-place businesses.
- Independent agent: An agent shops multiple carriers on your behalf. Useful if you have complex risk or multiple locations.
State regulator: Texas WC info
Cost in Texas
Texas's state loss cost multiplier is approximately 0.85x the national median. That's near the national middle.
Rough premium estimates by industry (per $100 of annual payroll):
- Office / clerical: ~$0.13
- Retail store: ~$1.02
- Restaurant (full-service): ~$1.57
- General construction: ~$5.78
- Roofing: ~$12.75
Consequences of Going Uninsured
Operating without required workers' comp coverage in Texas exposes you to:
- Civil penalties (typical range: $1,000 – $10,000 per uninsured employee)
- Personal liability for any workplace injury (medical + lost wages + pain and suffering)
- Criminal charges in serious cases (misdemeanor to felony depending on state)
- Stop-work orders that halt operations until coverage is in place
- Loss of business license
For most businesses, coverage costs a small fraction of one uninsured claim.
Texas-Specific Workers' Comp Details
What makes Texas's workers' comp system different from other states.
- Texas is unique — private employers can opt out of workers' comp entirely (becoming 'nonsubscribers'). About 30% of Texas private employers are nonsubscribers.
- Texas Department of Insurance regulates workers' comp for subscribers.
- Nonsubscriber employers lose common defenses in negligence suits — trade-off of opting out.
Reference only — verify with the Texas regulator.
Requirements and thresholds change. Certain industries (agriculture, domestic workers) may have different rules. Consult a licensed insurance agent or theTexas workers' compensation regulator before making coverage decisions.