Do You Need Workers’ Compensation Insurance as a Texas Business Owner?

As a Texas business owner with employees, you might wonder if you’re required to carry workers’ compensation insurance. While Texas does not mandate workers’ compensation coverage for employers, opting for this coverage can provide significant benefits and protections for your business and your employees. Let’s break down who is covered, what workers’ compensation includes, and why it’s a smart investment for your business.

Who is Covered Under Workers’ Compensation Insurance?

The Texas Workers’ Compensation Act defines an employee as an individual “in the service of another under a contract of hire, whether express or implied, oral or written.¹” This definition applies broadly and does not differentiate between W-2 employees and 1099 independent contractors. However, there are exceptions.

Independent Contractors are generally not covered under an employer’s workers’ comp policy unless one of these conditions applies:

• The contractor does not have their own workers’ comp policy and has not provided proof of coverage via a Certificate of Insurance.
• There is no signed joint agreement form (DWC85) affirming their independent contractor status.

Without these safeguards in place, employers may still be held responsible for covering independent contractors under their workers’ compensation policy.

What Does Workers’ Compensation Cover?

Workers’ compensation insurance protects employees injured or exposed to work-related hazards. Here’s what it typically includes:

• Medical Expenses: Covers treatments, surgeries, medications, and other healthcare needs resulting from workplace injuries.
• Wage Replacement: Provides partial income to employees while they recover.
• Disability Benefits: Offers compensation for temporary or permanent disabilities caused by work-related incidents.
• Rehabilitation Services: Assists employees in returning to work through therapy or training.
• Death Benefits: Provides financial support to the family of an employee who passes away due to a workplace incident, including funeral expenses.

In some cases, owners and executive officers may also be eligible for coverage under a workers’ compensation policy.

Why Is Workers’ Compensation Important for Your Business?

Workers’ compensation offers your business protection and peace of mind. If an employee is injured or becomes ill on the job, this policy ensures:

• Financial stability for employees: Covers medical costs and replaces income during recovery.
• Legal protection for employers: Shields your business from lawsuits related to workplace injuries.
• Team morale: Demonstrates that you value and support your employees, helping retain top talent.

Your employees are among your greatest assets, and you’ve invested significant time, money, and resources in building your team. A workers’ compensation policy helps protect this investment, ensuring your team can recover and return to work without unnecessary stress.

While not legally required in Texas, workers’ compensation insurance is a critical safeguard for businesses looking to protect their team and their bottom line. Secure coverage today to protect your business and employees from the unexpected.

My Insurance Group are modern-day insurance advisors, providing tailored options and quality service from quote to claims. If you’re ready to experience a better way to insure, call us at (210) 708-3203 or Click here to get started on your quote.

1. Texas Labor Code Section 401 defines what an employee under the Texas Workers’ Compensation Act: https://statutes.capitol.texas.gov/Docs/LA/htm/LA.401.htm ↩︎