Workers Comp Insurance in Texas
Texas lets private employers choose whether to carry workers comp. Choosing no comes with annual filings, employee notices, a penalty ceiling of $25,000 a day and a lawsuit exposure most owners never hear about. Choosing yes is mandatory on public projects. Here is how Texas actually works.
Commercial Insurance › Workers Compensation › Texas
Workers compensation pays medical bills and lost wages when an employee is hurt on the job. The Texas Department of Insurance, Division of Workers' Compensation (DWC) runs the system. The old Texas Workers' Compensation Commission is gone; its functions moved to TDI-DWC in 2005.
This page covers the Texas rules. For how comp works in general, see our workers compensation guide.
Written and reviewed by the Grit Insurance Group team · Last reviewed October 12, 2026
Grit is an independent brokerage licensed in Texas. We place commercial insurance and surety bonds for Texas businesses from our headquarters in Salt Lake City.
Is Workers Comp Required in Texas?
Not for most private employers. Labor Code 406.002(a) reads: "Except for public employers and as otherwise provided by law, an employer may elect to obtain workers' compensation insurance coverage." An employer that elects coverage is subject to the full workers comp system. An employer that does not is a non-subscriber.
Coverage is mandatory in two places:
- Public employers. The statute carves them out of the choice.
- Government building and construction contracts. Contractors and every subcontractor must certify coverage for their employees on the project (Labor Code 406.096). More on that below.
Your contracts can require it too, and many general contractors will not let an uninsured sub on site.
What Does a Texas Non-Subscriber Have to Do?
Choosing not to carry comp is a filing, not a shrug. Labor Code 406.004 requires a non-subscriber to notify DWC in writing, and DWC rule 28 TAC 110.103 sets the timing. The notice is DWC Form-005, filed online through DWC's Employer E-File:
| When | What to file |
|---|---|
| Every year, February 1 to April 30 | DWC-005 covering May 1 of that year through the end of April the next year |
| Within 30 days of hiring your first employee subject to coverage | DWC-005 |
| Within 10 days of terminating workers comp coverage | DWC-005 |
| Within 10 days of a DWC request | DWC-005 |
A notice counts as filed only when it accurately contains every required data element. Non-subscribers with five or more employees must also report work-related injuries, illnesses and deaths with more than one day of lost time on DWC Form-007, according to TDI.
Notice to employees (Labor Code 406.005 and 28 TAC 110.101):
- Tell each new employee in writing whether you carry comp, at the time of hire. DWC defines that as when federal law requires the employee to complete a W-4 and an I-9.
- Post a notice of your coverage status at conspicuous locations, with a title in at least 26 point bold type, subject in at least 18 point bold and text in at least 16 point. It must be in English, Spanish and any other language common to your workforce.
- If you start or end coverage, notify each employee within 15 days.
What Is the Penalty for Not Filing as a Non-Subscriber?
Failing to file or give notice is an administrative violation. Under Labor Code 415.021, as amended in 2025 by HB 1306, the administrative penalty "shall not exceed $25,000 per day per occurrence," and each day of noncompliance is a separate violation. That is a ceiling, not a typical fine, but it is the number DWC works under. The filing takes minutes. Do it.
Can an Injured Employee Sue a Texas Non-Subscriber?
Yes, and the employer loses its usual defenses. Under Labor Code 406.033, a non-subscriber sued by an injured employee cannot argue that:
- the employee was negligent too;
- the employee assumed the risk; or
- a co-worker's negligence caused the injury.
The employer can still defend on the ground that the employee intended the injury or was intoxicated. And the part most pages leave out: the employee still has to prove the employer was negligent (406.033(d)). Non-subscription does not mean automatic liability. It means a negligence case with the employer's best arguments taken away.
Two more rules. A waiver of the right to sue signed before an injury is void and unenforceable. A waiver after an injury is valid only if it is signed no earlier than the 10th business day after the injury report, after a medical evaluation by a nonemergency doctor, and in conspicuous writing. If you go without comp, talk to us about how you will pay for an injury lawsuit before you have one.
Where Is Workers Comp Mandatory in Texas?
Public employers
Texas governmental entities must carry coverage. Labor Code 406.002 excludes them from the choice.
Government building and construction contracts
When a Texas governmental entity, including a city, signs a building or construction contract, Labor Code 406.096 requires the contractor to certify in writing that it provides workers comp for each of its employees on the public project. Every subcontractor provides the same certificate to the general contractor, who passes it to the governmental entity. "Building or construction" covers buildings, bridges, roadways and public utility facilities, plus remodeling, repair and demolition.
DWC rule 28 TAC 110.110 spells out the duties. The contractor has to:
- provide its certificate before starting work, and a renewal certificate before the current one expires;
- collect certificates from every person providing services on the project before they start, and collect renewals within 7 days of receiving them;
- keep the certificates for the duration of the project and for one year after;
- notify the governmental entity within 10 days of any material change in coverage;
- post the required jobsite notice in English and Spanish; and
- flow the same requirements down by contract.
"Persons providing services" includes subcontractors, independent contractors, leasing companies, motor carriers and owner-operators, including anyone hauling or delivering equipment or materials. It does not include unrelated vendors such as food deliveries or portable toilet drop-off. A certificate is a representation that coverage is based on proper reporting of class codes and payroll, and a false one can bring administrative, criminal or civil penalties.
One exception: a sole proprietor, a partner, or a corporate officer with at least 25 percent equity in a covered business may be excluded from coverage under this rule (406.097(c)).
DWC also publishes agreement forms for building and construction relationships: DWC-81 for a general contractor and sub agreeing the general contractor will provide comp, DWC-82 for motor carriers and owner-operators, DWC-83 for a joint agreement affirming an independent relationship, DWC-84 for an exception to that joint agreement, and DWC-85 for a general contractor and sub establishing an independent relationship. A DWC-83 must be filed with the hiring contractor's carrier within 10 days of signing. Whether a worker is an employee or an independent contractor is a legal question; take it to an employment attorney. We can tell you how the policy and the audit will treat them.
Is Texas Mutual the Assigned Risk Pool?
No. Texas Mutual is the insurer of last resort itself. Some pages describe an assigned risk pool run on behalf of the state. The statute says otherwise. Under Insurance Code chapter 2054, Texas Mutual Insurance Company is the successor to the Texas Workers' Compensation Insurance Fund and must:
- serve as a competitive force in the marketplace;
- guarantee the availability of workers comp in Texas; and
- serve as an insurer of last resort (2054.151).
It may not refuse a risk that tenders the premium and any accident prevention fee. If a risk fails its underwriting standards, it must still insure it at a higher premium (2054.351), with narrow exceptions (2054.352).
Texas Mutual is not the only option. Texas law allows coverage through any licensed insurance company or through self-insurance (406.003), so quote both.
Subscriber or Non-Subscriber: How to Decide
This is a business decision, and both sides have real costs. Questions to answer honestly:
- Do you bid public work? Government construction contracts require coverage.
- How would you pay a serious injury lawsuit? Your GL policy will not defend it.
- Will you keep up with the filings and notices every year?
Switching has rules. To drop coverage, notify DWC within 10 days of notifying your carrier; termination takes effect on the later of 30 days after the DWC filing or the policy cancellation date, and you owe premium for the extension (406.007). Either way, you cannot charge comp premium back to employees (415.006).
How Texas Workers Comp Premium Is Calculated
| Input | What it is | What you control |
|---|---|---|
| Class code | Describes the work each employee does. Office and field classes carry very different rates. | Keep every employee in the correct class. |
| Payroll | Premium is charged per $100 of payroll in each class. | Estimate honestly. The audit trues it up. |
| Experience mod | Compares your claims to similar businesses. | Safety, return-to-work, and prompt claim reporting. |
| Uninsured subs | Commonly added to your payroll at audit. | Collect certificates from every sub. |
A Texas policy does not automatically cover work in another state, so list every state you work in on the application.
Frequently Asked Questions
Is workers comp required in Texas?
Not for most private employers. Labor Code 406.002 lets private employers choose whether to carry workers compensation. Public employers must have it, and contractors and subcontractors on government building or construction contracts must certify coverage for their employees on the project.
What is a non-subscriber in Texas?
A non-subscriber is a Texas employer that has chosen not to carry workers compensation. It must file a notice with the Division of Workers' Compensation, notify new hires in writing, post a notice at the workplace in English and Spanish, and can be sued by injured employees without the usual employer defenses.
When do Texas non-subscribers file the DWC-005?
Every year between February 1 and April 30, within 30 days after hiring the first employee subject to coverage, within 10 days after terminating workers comp coverage, and within 10 days after the Division asks for it. Filing is done online through DWC's Employer E-File.
Can an injured employee sue a Texas employer without workers comp?
Yes. Under Labor Code 406.033, a non-subscriber cannot defend on the grounds that the employee was negligent, assumed the risk or was hurt by a co-worker's negligence. The employee still has to prove the employer was negligent, and a waiver signed before the injury is void.
Is Texas Mutual the only place to buy workers comp in Texas?
No. Texas Mutual Insurance Company is required by statute to serve as the insurer of last resort, but Texas workers comp can be written by any licensed insurance company, and some employers self-insure. An independent agent can quote Texas Mutual alongside private carriers.
Get a Texas Workers Comp Quote
Send us payroll by class and three years of loss runs. We will check your class codes and mod, and quote Texas Mutual alongside the private carriers that fit your operation. Weighing non-subscription? We will walk through the trade-offs with you.
Call the Grit team at (801) 505-5500 or start online.
