If you own a business in Texas and have employees, workers’ compensation insurance can be confusing—especially because Texas laws are different from most other states. Understanding how workers’ comp works, when it’s required, and what happens if you don’t carry it can help protect your business from serious financial and legal risk.
This guide explains Texas workers’ compensation laws in plain language, so you can make informed decisions for your company.
Is Workers’ Compensation Required in Texas?
Texas is the only state where most private employers are not required to carry workers’ compensation insurance.
Employers who choose not to carry coverage are called non-subscribers.
However, there are important exceptions:
- Certain government entities must carry workers’ comp
- Many contracts, leases, and clients require proof of coverage
- Some industries face higher legal exposure without it
Even when it’s optional, not carrying workers’ comp comes with significant risks.
What Happens If You Don’t Carry Workers’ Comp in Texas?
If you opt out of workers’ compensation:
You lose key legal protections
Non-subscriber employers:
- Can be sued by injured employees
- Cannot use common legal defenses like employee negligence
- May face unlimited damages (medical costs, lost wages, pain & suffering)
You must report non-subscription
Texas non-subscribers are required to:
- File a notice with the Texas Department of Insurance (TDI)
- Inform employees in writing that you do not carry coverage
Failure to report can result in penalties and fines.
What Does Workers’ Compensation Insurance Cover?
For businesses that do carry it, workers’ comp typically covers:
- Medical expenses for work-related injuries or illnesses
- Lost wages during recovery
- Disability benefits
- Death benefits for surviving family members
- Legal protection against employee injury lawsuits
This protection applies regardless of fault.
Who Needs Workers’ Comp the Most in Texas?
While optional for many businesses, workers’ compensation is strongly recommended for:
- Construction & contracting companies
- Manufacturing & warehouse operations
- Restaurants & food service businesses
- Healthcare providers
- Businesses with physical or repetitive work
Even one injury claim can cost tens or hundreds of thousands of dollars without coverage.
How Much Does Workers’ Comp Cost in Texas?
Workers’ comp costs vary based on:
- Industry and job classifications
- Payroll size
- Claims history
- Safety programs in place
In many cases, the cost is far less than a single lawsuit or medical claim.
An independent insurance broker can compare multiple carriers to help you find competitive pricing.
Can You Be Sued If You Have Workers’ Comp?
Generally, no.
When you carry workers’ compensation:
- Employees give up the right to sue in most cases
- Claims are handled through the insurance system
- Your business gains predictable risk management
This legal protection is one of the biggest reasons Texas employers choose to carry coverage—even when it’s not required.
How SOGO Insurance Helps Texas Employers
Navigating Texas workers’ compensation laws can be overwhelming. SOGO Insurance helps businesses:
- Determine whether workers’ comp is right for their situation
- Compare policies from top-rated carriers
- Avoid coverage gaps and compliance issues
- Find cost-effective options for their industry
Whether you’re hiring your first employee or reviewing an existing policy, expert guidance can make all the difference.
Final Thoughts
Even though workers’ compensation is optional for many Texas employers, the risk of going without it can be substantial. Understanding your obligations—and your exposure—allows you to make the right decision for your business.
If you’re unsure whether workers’ comp makes sense for your company, speaking with a local insurance professional can help you weigh the costs and benefits.