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Texas Department of Insurance
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Workers' compensation insurance guide

Workers’ compensation pays for benefits like medical care to treat employees who are injured or become ill because of their jobs. It might also pay some of their lost income. If an employee dies because of a work-related injury or illness, it pays burial expenses and benefits to the employee’s family.

Workers’ compensation won’t pay if employees:

  • Intentionally caused their own injuries.
  • Were injured while playing around or while intoxicated.
  • Were injured outside work or while voluntarily participating in an off-duty sports or social event.
  • Were injured by someone else for personal reasons not related to the job.
  • Were injured by an “act of God,” like a flood or hurricane, unless the job had a high exposure to these types of events.

TDI’s Division of Workers’ Compensation (DWC) regulates workers’ compensation in Texas.

Do I have to have workers’ compensation insurance?

Texas doesn’t require most private employers to have workers’ compensation. But private employers who contract with government entities must provide workers’ compensation coverage for the employees working on the project. Some contractors may require their subcontractors and independent contractors to have workers’ compensation.

Employers with workers’ compensation have a key legal protection.

If you have workers’ compensation insurance, you’re protected from most lawsuits by injured employees. You can’t be sued unless an employee died because of your negligence.

Injured employees resolve their claim disputes through DWC’s dispute resolution process. If you or the employee is unhappy with DWC’s decision, you may appeal the decision to district court. The court will consider DWC’s decision. Your workers’ compensation insurance company will pay for your attorneys’ fees and other costs.

What if I don’t provide workers’ compensation?

If you don’t provide workers’ compensation coverage, you lose the legal protection against most lawsuits. This means an injured employee can sue you over a workplace injury or illness. Also, if you’re sued, you can’t argue in court that:

  • The employee’s negligence caused the injury.
  • Another employee’s negligence caused the injury.
  • The injured employee knew about the danger and accepted it.

Employers have several legal requirements if you don’t have workers’ compensation. You must:

  • File an annual notice with DWC.
  • Post notices in your offices and workplaces.
  • Tell new employees in writing that they’re not covered by workers’ compensation.

Providing workers’ compensation coverage

There are several ways you can provide workers’ compensation for your employees. You can:

  • Buy a workers’ compensation policy from a licensed insurance company.
  • Self-insure your workers’ compensation claims.
  • Join a self-insurance group.

Cities and counties may buy coverage from insurance companies, self-insure, or join with other cities and counties that self-insure. Emergency service organizations and cities and counties may also cover volunteers – such as volunteer firefighters and emergency medical personnel.

Buying coverage

Buy workers’ compensation insurance only from companies licensed by the Texas Department of Insurance. If you buy a policy from a company that isn’t licensed, it doesn’t count as coverage under state law.

You must have at least one employee to buy workers’ compensation insurance. The employee may be part-time. Some insurance companies will sell a policy to cover executive officers of a business that has no other employees. You can also buy insurance if you employ contractors who don’t have workers’ compensation.

You can’t charge your employees for workers’ compensation coverage. There are exceptions for independent contractors and construction workers.

Self-Insurance

Large private employers may self-insure their workers’ compensation claims. Employers who self-insure pay the cost of their claims themselves. You must get approval from DWC and meet financial requirements.

You can also join a self-insurance group. The group must get approval from TDI. The group members must be in the same or similar business and meet other requirements.

Health care networks

Insurance companies, government entities, self-insured employers, and self-insurance groups can set up health care networks to treat their injured workers or contract with existing networks. TDI must certify the network. Cities and counties can also contract directly with health care providers. The premium costs might be lower for employers who have coverage with an insurance company that uses a network.

For more information about workers’ compensation health care networks, visit the workers’ compensation networks page on TDI’s website.

What about ‘alternative policies’?

Texas law doesn’t consider alternative policies and coverage bought from unlicensed insurance companies as workers’ compensation. This means you lose your legal protection against lawsuits, and an injured employee could sue you for damages resulting from a work-related injury.

You also lose financial protection. Alternative policies have dollar and time limits. If an injured employee’s care expenses exceed the limit, you might have to pay the rest of the cost.

Shopping for workers’ compensation insurance

Use the Texas Workers’ Compensation Rate Guide to shop around to find the best rate.

It’s important to buy from licensed insurance companies. The Texas Property and Casualty Guaranty Association pays claims for licensed insurance companies that become insolvent. Claims against insurance companies that aren’t licensed might not get paid.

To learn whether a company is licensed, call our Help Line at 800-252-3439 or Look up an insurance company.

If you can’t find a company that will sell you a policy, you can buy from Texas Mutual Insurance Company. Call Texas Mutual at 800-859-5995 or visit texasmutual.com. Texas Mutual, originally the Texas Workers’ Compensation Insurance Fund, was created by the legislature in 1991 as a last resort option for Texas employers struggling or unable to find workers compensation coverage anywhere else. The company still operates as the insurer of last resort for the state.



Question? Call us at 800-252-3439.

Last updated: 1/25/2022