What is Workers' Compensation Insurance?

What is workers' compensation?

Workers’ compensation coverage protects both your business and your best business asset — your people. If your employees have a workplace injury or illness, your workers’ compensation policy will:

Pay for medical care reasonably required to treat the worker’s compensable injury or illness.
Replace a portion of income lost due to compensable injury or illness.
Offer you legal protection for damages resulting from the incident.

If a workplace incident results in an employee’s death, workers' compensation insurance will reimburse actual burial costs up to $10,000 and pay income benefits to qualifying dependents.

The cost of workers’ compensation is determined by your payroll and the risk level of the jobs you are paying employees to do, and your company’s safety record. Rates in Texas have decreased by 63% since 2005, according to the Texas Department of Insurance, making workers’ comp costs lower than ever.

Medical and financial care are integral to workers' comp

Am I required to carry workers' comp?

Texas is the only state that allows some employers a choice on whether to provide workers' compensation. Businesses that choose to provide workers’ comp are called "subscribers," and those who choose not to have workers’ compensation are called “nonsubscribers.” Some businesses choose alternative coverage, which is not comprehensive and can leave dangerous gaps in coverage.

Some Texas businesses, such as public employers or companies that enter into construction-related contracts with a governmental entity, must provide workers' comp. Many more find that proof of workers’ compensation insurance is a requirement they must meet to compete for key contracts.

See how workers' compensation coverage compares to other options in our helpful guide below.

Compare coverages (PDF)

Does my business need workers' comp?

While no one expects a workplace injury to happen, they can and do — in every industry and in many different types of roles. Workers’ compensation is good for both employers and workers because it protects both parties. It’s the only insurance that provides both medical and disability coverage for workers as well as legal protection for employers.

Employers who carry workers' comp provide a comprehensive safety net for workers in case of an injury on the job. When an employer purchases a policy from a licensed carrier like Texas Mutual, it also means they are protected against lawsuits arising from an injury caused by the employer's ordinary negligence.

Workers’ compensation protects Texas businesses, motivates safer working conditions and helps injured workers return to productive employment.

What if I have locations outside of Texas?

If you have business in Texas, and another state, your agent can submit a quote for coverage using our Internet Quoting tool. We will evaluate the submission, and if your business qualifies your agent will present you with a quote from Texas Mutual that includes your other states coverage through Argo. Your agent can submit a quote at any time to add coverage outside of Texas, not just at renewal.

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What if I don't carry workers' comp?

There’s no match for the comprehensive benefits of a workers’ compensation policy. Some nonsubscribers try to protect against risk with a patchwork of disability, occupational accident or other alternate coverage. But general liability and other policies are limited, and can end up costing more than workers’ comp. In fact, it could cost you your whole business.

Nonsubscribers bear complete financial responsibility for an employee's injury or death caused by the employer's ordinary negligence.

State law strips nonsubscribers of some common law defenses making it difficult to defend against such claims. In addition to paying multiple premiums, non-subscribers may also face substantial fees for safety expertise and materials that are included as a benefit to Texas Mutual policyholders.

We make it easy to for nonsubscribers to gain coverage. You can protect your business with workers’ comp at any time without penalty.

Workers' Compensation Basics