How does workers' comp work in Texas?

The Texas Department of Insurance's Division of Workers' Compensation (DWC) regulates the state's workers' compensation system and also certifies employers that want to self-insure.

Texas doesn't require most private employers to carry workers' compensation insurance. Employers who contract with the government are required to provide workers' compensation coverage for each employee working on the project. Some clients may also require their contractors to have workers' compensation insurance.

Employers who choose not to have workers' compensation insurance, Nonsubscribers, must file an annual notice with the Texas Department of Insurance. The must also display notices of no-coverage and give written statement to each new employee hired.

Workers' Comp Rules & Information for Texas

Texas State Insurance Directives Regarding Covid-19

Insurers are encouraged to use premium payment grace periods, temporary premium payment suspension, payment plans, and other actions to allow continuing coverage.  Automatic bank drafts may continue, unless a policyholder notifies the carrier of a specific hardship.  TDI will work with carriers to minimize regulatory effects of an insurer’s actions to provide policyholder relief, specifically with respect to financial review requirements.

Discretionary order in effect from 03/23/2020 until further notice.

State Orders Regarding Insurance Claims Related to Coronavirus

No current state orders.

Texas Work Comp Subscribers Have Coverage

Employers with workers' compensation have some important legal protection. They have immunity from most lawsuits by injured employees. If an employer has workers' compensation insurance, a lawsuit may only go to court after it's been through the Tex Department of Insurance's (TDI) administrative dispute process. The court will consider TDI's recommendations, and only issues in dispute may be used as evidence. Previously resolved issues can't be reintroduced. The employer's insurance company pays attorneys' fees and other defense costs.

Nonsubscribers Assume More Busibess Risk

Employers without workers' compensation coverage might have to pay punitive damages if they lose a lawsuit. They also lose certain common-law defenses, such as arguing that a) the injured employee's negligence caused the injury, b) the negligence of fellow employees caused the injury, or c) the injured employee knew about the danger and voluntarily accepted it.

TX Assigned Risk and State Fund Insurance

Employer that can't find workers' compensation insurance through the voluntary market may buy coverage from Texas Mutual Insurance Company. This is the insurance carrier of last resort in Texas. Texas Mutual has a special program called START for employers who can't find coverage in the voluntary market. This coverage is generally more expensive than coverage bought in the voluntary market. For more information, contact us today.

Coverage Exclusions in Texas

Injuries that are excluded under the Texas Workers Compensation Act:

  • Intentional or self-inflicted injuries
  • Result from horseplay or voluntary drug or alcohol intoxication
  • Inflicted by someone else for personal reasons unrelated to the job
  • Result from voluntary participation in off-duty recreational, social, or sports events
  • Result from 'acts of God' (like floods or hurricanes), unless the job has a particularly high risk of such injuries.
  • Cancelling a Texas Workers Comp Policy

    TX employers may cancel a policy before its expiration date by notifying the insurance company and DWC by certified mail. The insurance company must refund any unearned premium. Insurance companies may not charge a penalty if you choose to cancel your policy, there may be penalties involved if the policy is subject to retrospective rating or a deductible plan. Be sure to ask about penalties before you cancel a policy. An insurance company may also cancel or refuse to renew a policy. The company must provide advance notice to the policyholder and to DWC by certified mail. Companies must give 10 days' notice if they cancel or nonrenewal a policy because of delinquent premium payments or fraud. Cancellation or nonrenewal for most other reasons requires 30 day notice.

    TX Incentives for Small Business Owners

    Employers with a premium too low to qualify for experience rating may benefit from the TX premium incentive plan. Businesses with an estimated annual premium of less than $5,000 are eligible for a 10 percent discount if they had no compensable lost-time injuries during the last year. The discount increases to 15 percent if there were no compensable lost-time injuries during the last two years. If there were two or more lost-time injuries in the last year, a 10 percent surcharge is applied.

    TX Subscriber and Nonsubscriber Reporting Requirements

    Texas employers who do not carry workers' compensation insurance coverage are required to report their non-coverage status and work-related injuries or occupational diseases to the Division of Workers' Compensation (DWC). Employers who do carry workers' compensation insurance coverage are required to report all known occupational disease and any work-related injuries that result in more than one day of lost time. Employers that fail to meet these requirements commit an administrative violation and may be subject to administrative penalties.

    Workers Comp Fraud in Texas

    Any person who knowingly or intentionally makes a false or misleading statement to either deny or obtain workers' compensation benefits or insurance coverage, or who, with such a purpose, misrepresents or conceals a material fact, fabricates, alters, conceals or destroys a material document or conspires to commit such acts commits an administrative violation that may result in a sanction, fine or penalty.

    More Programs and Options

    We're always working with our insurance carriers to develop specialized programs for a broad range of industry class codes. Our Target Programs are designed to streamline the underwriting process and help ensure we offer the lowest rates available anywhere.

    • Contractors
    • Home Health Care
    • Janitorial Services
    • Transportation
    • Hospitality
    • And More
    Texas Work Comp Information

    Coverage is Paid by Employers

    Employers may not charge workers for workers' compensation coverage. There are some exceptions for independent contractors and certain building and construction workers

    Let Workers Compensation Shop.com help your business navigate workers comp insurance in Texas.

    What Does Workers' Compensation Insurance Cover?

    ...
    Workers' comp coverage protects employees when injured. It makes good financial sense for both parties.
    Injuries and accidents happen. A workers' comp policy is a no-fault system that pays for these accidents and claims. It's required by law in most states.
    • Loss of income for employees unable to perform job duties
    • Medical expenses for employees injured on the job
    • Retraining expenses for employees unable to return
    • Permanent injury or disability for lasting injuries
    • Survivor benefits if employees are killed on the job
    Coverage does not protect employers from everything. Sometimes employees and employers can be negligent.
    ...
    In some instances, workers' compensation coverage will not protect employers or employees from the legal liability resulting from a workplace injury.
    • Injuries resulting from a violation of the law
    • Incidents resulting from employees' use fo drugs or alcohol
    • Injuries that did not occur in connection with the job
    • Clear company policy violations
    • Injuries that did not occur in connection with the job

    Workers' Comp Includes Employers Liability Insurance?

    Employers liability insurance is an additional layer of coverage included as part of a workers' compensation insurance policy. Employers Liability is know as Part 2 of the policy. It adds two additional coverages for employers:

    Employers Legal Liability and Legal Defense Costs

    In todays world, there are a variety of reasons employees and third-parties sue employers for damages. Here a some common types covered by employers liability insurance:

    Third Party Lawsuits

    Your employee sues another party that may have contributed to the injury, In turn, the third party sues your business.

    Consequential Bodily Injury

    Another party or individual is injured while providing care for the injured employee.

    Dual Capacity Legal Action

    An employee files a claim but also attempts to sue the employer for being responsible in other ways outside of the employment relationship.

    Loss of Consortium

    A spouse sues for damages caused by the loss of companionship or relations.

    Employers Liability coverage is not included with coverage in the four monopolistic states. Employers in these states can endorse this coverage onto their General Liability policy. That coverage is commonly know as Stop Gap Coverage.

    Visit NCCI for more resources and information about workers' compensation class codes. Visit United States Department of Labor for more information about government agencies managing workers compensation insurance rates.

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