Workers’ compensation insurance guide

Workers' compensation insurance guide

Workers’ compensation pays for benefits like medical care for workers who get hurt on the job or get sick. It might also make up for some of the money they lost. If an employee dies because of an injury or illness, the company pays for the funeral and benefits the employee’s family.

Workers’ comp won’t pay out if an employee:

  • They hurt themselves on purpose.
  • We were hurt while messing around or being drunk.
  • They were hurt outside of work or while participating in a sport or social activity on their own time.
  • They were hurt by someone else for reasons that had nothing to do with work.
  • Were hurt by an “act of God,” such as a flood or hurricane, unless the job had a lot of exposure to these events.
  • TDI’s Division of Workers’ Compensation (DWC) regulates workers’ compensation in Texas.

Do I need to have insurance for workers’ compensation?

Most private employers in Texas are not required to have workers’ compensation. But private employers who do work for the government must ensure that workers’ compensation covers their workers. Some contractors might want their subcontractors and independent contractors to have workers’ compensation.

Workers’ compensation is a critical legal protection for employers.

If you have workers’ compensation insurance, injured workers are less likely to sue you. You can’t be sued unless your carelessness caused an employee’s death.

Through DWC’s dispute resolution process, injured workers can settle disagreements about their claims. If you or the employee don’t like the decision made by DWC, you can take it to the district court. The court will think about what DWC has decided. Your workers’ compensation insurance company will pay for your lawyer fees and other costs.

What happens if I don’t provide workers’ compensation?

  • If you don’t have workers’ compensation insurance, most lawsuits can be brought against you. That means an employee who gets hurt or sick on the job can sue you. Also, if you are being sued, you can’t say in court:
  • The injury happened because of the employee’s carelessness.
  • The carelessness of another worker caused the injury.
  • The worker who got hurt knew about the risk and was okay with it.
  • Employers must meet several legal requirements if they don’t have workers’ compensation. You must:
  • Send DWC an annual notice.
  • Put up signs in your workplaces and offices.
  • Tell new employees in writing that workers’ compensation does not cover them.
  • offering coverage for workers’ compensation

Providing workers’ compensation coverage:

  • Buy a workers’ compensation policy from an insurance company licensed to do business.
  • Self-insure your claims for workers’ comp.
  • Join a group that lets people insure themselves.

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

Purchasing insurance

Only buy workers’ compensation insurance from a company licensed by the Texas Department of Insurance. Under state law, if you buy a policy from a company that isn’t licensed, it doesn’t count as insurance.

To buy workers’ compensation insurance, you must have at least one employee. The worker might only work part-time. Some insurance companies will sell a policy to cover the executive officers of a business with no other employees. You can also buy insurance if you hire contractors who don’t have workers’ compensation.

You can’t make your workers pay for workers’ compensation. There are exceptions for construction workers and people who work for themselves.


Large private employers can self-insure their workers’ compensation claims. When an employer self-insures, they pay for their claims. You must get approval from DWC and meet financial requirements.

You can also join a group for self-insurance. The group must ask TDI for permission. The people in the group must be in the same or a similar business and must also meet other requirements.

Networks in Healthcare

Insurance companies, government agencies, self-insured employers, and self-insurance groups can set up healthcare networks to treat injured workers or contract with existing networks. TDI must approve the network. Cities and counties can also sign contracts directly with healthcare providers. Employers who have coverage through an insurance company that uses a network may pay less for their premiums.

To learn more about workers’ compensation health care networks, go to TDI’s website and look at the page about workers’ compensation networks.

What about “different policies”?

Under Texas law, alternative policies and coverage bought from insurance companies that are not licensed are not allowed to be considered workers’ compensation. That means you lose your legal protection against lawsuits, and an employee who gets hurt at work could sue you for damages.

You also lose protection from money problems. There are dollar and time limits on alternative policies. You might have to pay the rest if an employee gets hurt and their medical costs exceed the limit.

Shop around for workers’ comp insurance

Use the Texas Workers’ Compensation Rate Guide to compare rates to find the best one.

It is essential to buy insurance from a licensed company. The Texas Property and Casualty Guaranty Association pays claims for licensed insurance companies that run out of money and can’t pay their customers. Insurance companies that aren’t licensed might not have to pay claims.