Buying workers’ compensation for:


State Fund: Texas Mutual Insurance Company is the insurance company in Texas that sells policies to at risk employers. The state of Texas does not fund any insurance companies.

Insurance Coverage Requirements: With few exceptions, workers’ compensation insurance limits the employer’s liability for the work-related injury or death sustained by the worker.

Who is Required to Purchase Workers’ Compensation Coverage?

Workers’ Compensation is elective in Texas. Employers, except for public entities, can choose whether or not to provide workers’ compensation insurance coverage for their employees. Workers’ compensation provides covered employees with income and medical benefits if they are injured on the job or have a work-related injury or illness. Workers’ compensation is regulated by the Texas Department of Insurance, Division of Workers’ Compensation (the Division).

Participation in the workers’ compensation system in Texas is voluntary for most employers.

The Texas Workers’ Compensation Act provides a covered employer the following rights:

  • the right to contest the compensability of a workers’ compensation claim (claim) if the employer’s insurance carrier accepts liability. Contesting the compensability of a claim means the employer can present evidence in dispute resolution proceedings held at the Division and in court that indicates the employee’s injury, illness, or death did not occur on the job or is not work-related.
  • the right to receive notice, after making a written request to the insurance carrier, about any dispute resolution proceeding or court proceeding related to an employee’s claim, or any proposal to settle the claim by an agreement.
  • the right to attend all dispute resolution proceedings related to an employee’s claim.
  • the right to present relevant evidence about disputed issues at dispute resolution proceedings.
  • the right to report suspected workers’ compensation fraud to the Division or to the insurance carrier.
  • the right to contest the failure of the insurance carrier to provide accident prevention services required by the Act.

Specifically, the law requires all non-subscribers to:

  • File an annual notice of no coverage with DWC;
  • Prominently display English and Spanish notices of non-coverage in the personnel office and throughout the workplace;
  • Give a written statement of non-coverage to each new employee when hired;
  • and Give a written statement of non-coverage to each employee when you cancel or lose your coverage.

Factors that Impact Coverage

  • You are a sole proprietor or partner: In Texas, you are included in coverage but have the option to exclude yourself.
  • You are a corporate officer or member of an LLC: Texas includes you in coverage, but you have the option to exclude yourself.

Failure to Secure Compensation

Employers that fail to obtain insurance when required may be ordered by the Department to cease operations until coverage is obtained. The normal penalty for an illegal lapse in worker’s compensation coverage is twice the amount of premium not paid during the uninsured time period or $750, whichever is greater. An employer who has an illegal lapse in worker’s compensation insurance of 7 consecutive days or less is subject to a $100 penalty for each uninsured day up to 7 days, provided that the employer has not previously had an illegal lapse in coverage and that no injury occurred during the uninsured period.

An uninsured employer is personally liable to reimburse the Uninsured Employers Fund for benefit payments to an injured employee. Aggressive collection action including warrants, levies, garnishment and execution against property are used to insure reimbursement. The normal exemptions of property from seizure and sale on execution of a judgment do not apply to uninsured employers.

Proof of Coverage is Required

If you buy workers’ compensation insurance, you are considered a "subscriber." As a subscriber, you will be required to post a notice at your work place that provides your insurance carrier’s name, information regarding the Ombudsman program at the Texas Department of Insurance, Division of Workers’ Compensation (Division), and a contact number for reporting unsafe work conditions. This notice must be placed in the employer’s personnel office and in a prominent place where employees can see it regularly.

You are also required to give written notice of your coverage to new employees upon hire and inform them of their right to reject your workers’ compensation coverage and retain their common law right for action in district court. If at any time your coverage lapses and then you obtain coverage again, you are required to give all employees this change of coverage information in writing.

If you do not carry workers’ compensation insurance coverage, you are considered a "non-subscriber," and you must notify your employees and the Division that you do not have workers’ compensation insurance.

Notices in English, Spanish and any other language common to the employer’s employee population must be posted and prominently displayed in the employer’s personnel office, if any; and located about the workplace in such a way that each employee is likely to see the notice on a regular basis;

Failure to post or to provide notice as required in the rule is a violation of the Act and Division rules. The violator may be subject to administrative penalties.

Independent Contractors

Mistakenly classifying an employee as an independent contractor can result in significant fines and penalties.

View 20 factors used by the IRS and our independent contractor questionnaire to determine whether you have enough control over a worker to be an employer.

Key Resources

Other Tips

If your insured employs workers in multiple states or your insured’s employees are temporarily working out-of-state, they need to purchase insurance for all the states where their workers are located, according to each state’s laws. Call 1-800-476-2948 and let us walk you through it.

The nature of your insured’s business, number of employees being covered and past coverage and claims are all factors in how much their premium will cost.