Texas Gives You a Choice—But Not Without Risk
If you own a business in Plano, McKinney, Allen, Celina, Prosper, or Richardson, you’ve probably heard this one: “Texas doesn’t require private employers to carry workers’ compensation.”
That’s true. Texas is the only state that lets private businesses opt out.
But here’s what many business owners don’t realize—skipping coverage doesn’t mean skipping risk.
At Sterling Insurance, we talk with plenty of contractors, retailers, and small business owners who ask, “Do I really need workers’ comp if it’s optional?”
The short answer: going without it can cost you far more than the premium you’d save.
What Workers’ Compensation Actually Covers
Workers’ comp is designed to protect both your employees and your business when job-related injuries or illnesses happen. It pays for:
- Medical care
- Lost wages while the employee recovers
- Rehabilitation costs
- Death benefits to families if tragedy strikes
It also protects you—the employer—by limiting lawsuits tied to workplace injuries.
What Makes Texas Different
Texas stands alone in letting private employers choose whether or not to subscribe to workers’ comp.
If you don’t, your business becomes a non-subscriber. That status comes with freedom—but also exposure.
What Happens If You’re a Non-Subscriber
You might save money upfront by skipping premiums. But you also lose the legal protection that workers’ comp provides.
If an employee gets injured and you’re uninsured, they can sue you for negligence—and you lose several important defenses that insured employers have.
You can’t claim:
- The employee’s own negligence caused the injury
- A co-worker was at fault
- The employee “assumed the risk” by taking the job
That means even a single claim can hit your bottom line hard.
You’re on the hook for:
- Medical expenses
- Lost wages
- Pain and suffering damages
- Legal defense and settlement costs
Real-Life Example
A Dallas-area roofing contractor decided not to carry workers’ comp. When a worker fell from a ladder and fractured a leg, the business ended up paying:
- $45,000 in medical bills
- $20,000 for lost wages
- $80,000 in pain and suffering
- $12,000 in attorney fees
That’s over $150,000 out of pocket—for one accident.
The annual cost of a workers’ comp policy? Roughly $6,000.
What About Subcontractors?
Many business owners assume they’re safe if they use only 1099 subcontractors. Not always.
In Texas, you can still be held liable if a subcontractor—or one of their workers—gets hurt on your job site and lacks insurance.
Protect yourself by:
- Requesting a Certificate of Insurance (COI) from every subcontractor
- Keeping updated copies on file for audits
If you can’t prove coverage, your insurance carrier may count those subcontractors as employees and adjust your rates or charge you back premiums.
Reporting and Compliance Rules
Texas doesn’t fine you simply for going without workers’ comp. But there are still reporting requirements you must follow:
You must:
- Notify the Texas Department of Insurance (TDI) that you’re a non-subscriber
- Post written notices at the workplace stating you don’t carry coverage
- Inform every employee in writing
Skip those steps, and you could face:
- Civil penalties
- Lawsuits from injured employees
- Damage to your company’s reputation
Can Health Insurance Replace Workers’ Comp?
No. Health insurance won’t cover on-the-job injuries in most cases. Even if it does, it doesn’t:
- Pay lost wages
- Cover legal defense
- Protect you from being sued
Workers’ comp is the only policy that covers both the employee’s recovery and your legal exposure.
What About Private Injury Plans?
Some Texas employers create Occupational Accident Policies or private ERISA-based injury plans instead of traditional WC.
While they can help with limited medical and wage coverage, they do not shield you from lawsuits. You’re still considered a non-subscriber and open to litigation.
What It Costs to Carry Workers’ Comp in Texas
Rates depend on payroll, job type, and claims history, but here’s a general idea:
- Office or retail: $300–$800 per employee per year
- Light construction: $1,000–$2,500 per employee per year
- Roofing and heavy trades: $3,000+ per employee per year
Discounts often apply for:
- Strong safety programs
- Good claims records (low MOD)
- Return-to-work initiatives
Should You Carry It?
Ask yourself:
- Do my employees do physical work?
- Could I afford a six-figure injury claim?
- Do I bid on city or state contracts that require proof of coverage?
- Am I prepared to handle a lawsuit alone?
If any answer gives you pause, workers’ comp is worth serious consideration.
How Sterling Insurance Helps Dallas-Area Businesses
At Sterling Insurance, we work with businesses throughout Plano, McKinney, Allen, Celina, Prosper, and Richardson—from small retailers to multi-crew contractors.
We help you:
- Understand Texas WC rules and non-subscriber laws
- Compare workers’ comp vs. occupational accident plans
- Choose the right policy for your size and industry
- Prepare for audits and stay compliant
Our team makes it clear, simple, and built around your business—not red tape.
Final Takeaway: Optional Doesn’t Mean Risk-Free
Texas may let you skip workers’ comp, but one accident could undo years of hard work.
The question isn’t “Do I have to buy it?”
It’s “Can I afford not to?”
If you’re unsure about your options, let’s talk. We’ll walk through what makes sense for your budget and risk level—so you can make an informed decision that protects both your people and your business.
Call Sterling Insurance in Plano, TX today.
Phone: (972) 964-4825
Email: info@sterlinginsnow..com
Website: https://www.sterlinginsnow.com