Business Insurance  /  Workers’ Compensation

Commercial Coverage

Workers’ Compensation
Insurance for Texas
Businesses.

When an employee gets hurt on the job, workers’ comp is what covers their medical bills, their lost wages, and your business from a lawsuit with no cap on damages. In Texas — the only state where it’s not required — the decision to carry it is yours. The consequences of not having it are not.

What Workers’ Compensation Insurance Covers

Coverage for your employees when something goes wrong — and protection for your business when it does.

Workers’ compensation insurance pays for medical treatment and lost wages when an employee is injured or becomes ill because of their work. In exchange, the injured employee gives up the right to sue the employer for negligence. That tradeoff is the foundation of the workers’ comp system — it creates a defined, structured process for handling workplace injuries rather than leaving both parties to the uncertainty of civil litigation.

Without workers’ comp, that structure doesn’t exist. An injured employee who isn’t covered by workers’ comp can sue your business in civil court — and in Texas, they can do so with no cap on what they can recover. Medical costs, lost wages, pain and suffering, and punitive damages are all on the table. One serious injury at an uninsured business can be a business-ending financial event.

“Workers’ comp isn’t just about paying a medical bill. It’s about creating a defined process for what happens when someone gets hurt — so your business doesn’t end up in open-ended civil litigation with no ceiling on the outcome.”

It also covers occupational illness — conditions that develop over time from work exposure, like repetitive stress injuries, chemical exposure, or hearing loss. These are workers’ comp claims too, even when they don’t result from a single incident.

What workers’ compensation pays for:

✓
Medical treatment
Emergency care, hospitalization, surgery, physical therapy, and ongoing treatment for covered work injuries
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Lost wages
A portion of the employee’s wages while they’re unable to work — typically around two-thirds of their regular pay
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Permanent disability benefits
Compensation for lasting impairment if the injury results in a permanent reduction in the employee’s earning capacity
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Vocational rehabilitation
Retraining or job placement assistance if the employee can no longer perform their previous role due to the injury
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Death benefits
Payments to surviving dependents and burial expenses in the event of a work-related fatality
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Employer liability protection
Covers your legal defense and damages if an employee or their family pursues a claim related to a workplace injury

Texas-Specific Considerations

Texas is the only state that doesn’t require workers’ comp. Here’s what that actually means.

Most business owners hear “not required in Texas” and think that settles it. It doesn’t. The decision to opt out of workers’ comp in Texas comes with specific legal consequences that most employers don’t fully understand until they’re facing a claim.

Non-subscribers lose key legal protections

Employers who opt out of workers’ comp — called non-subscribers — cannot use contributory negligence as a defense when sued by an injured employee. Even if the employee was partially at fault, that doesn’t reduce your liability. Civil damages are uncapped. The financial exposure of a serious injury lawsuit as a non-subscriber is substantially greater than the cost of carrying coverage.

Some employers must carry it regardless

Contractors working on government projects, businesses with certain state licenses, and employers whose contracts require it must carry workers’ comp even though Texas law doesn’t universally mandate it. Many general contractors and commercial clients require proof of workers’ comp before subcontractors can work on a job — making it a practical requirement even when it isn’t a legal one.

Non-subscribers must notify employees and report to the state

If you choose not to carry workers’ comp, Texas law requires you to notify every employee in writing and report your non-subscriber status to the Texas Department of Insurance annually. Failure to comply carries separate penalties — on top of the unlimited civil liability you’re already accepting by operating without coverage.

What Happens Without Workers’ Comp

The real financial exposure of being an uninsured employer in Texas.

These are the situations that play out for Texas employers without workers’ comp. The question isn’t whether workplace injuries happen — it’s whether your business survives one.

01
An employee is seriously injured and requires surgery
Without workers’ comp, you’re directly responsible for their medical bills. A serious workplace injury can generate six figures in medical costs before rehabilitation even begins. There’s no carrier absorbing that cost. It comes directly from your business.

03
A worker is killed on the job
Death benefits under workers’ comp are a defined, structured payment to surviving dependents. Without coverage, the family can pursue a wrongful death suit in civil court. These cases regularly result in million-dollar judgments. The financial and reputational consequences for the employer are frequently fatal to the business.

05
An occupational illness surfaces years later
Not all workers’ comp claims come from a single incident. Chemical exposure, repetitive motion injuries, hearing loss, and respiratory conditions that develop over years are also workers’ comp claims. Without coverage, these can surface long after the exposure as uncapped civil court territory.

02
The injured employee sues your business
Non-subscribing employers in Texas cannot use contributory negligence as a defense — even if the employee was partially at fault, that doesn’t limit your liability. A civil suit can include medical costs, lost wages, pain and suffering, and punitive damages with no cap. The judgment amount is whatever a jury decides.

04
A contractor requires proof of coverage to start a job
Many general contractors, property managers, and commercial clients require subcontractors to show proof of workers’ comp before work begins. Without it, you can’t take the job. For businesses in trades, construction, or landscaping, this is a real barrier to commercial work — not just a legal technicality.

06
Your general liability policy doesn’t cover it
General liability explicitly excludes bodily injury to employees of the insured. It is not a substitute for workers’ comp. Employers who assume GL covers workplace injuries find out at the worst possible moment that it doesn’t. Workers’ comp is the only coverage designed for this specific exposure.

How Workers’ Comp Is Priced

Your premium is based on your payroll, your industry, and your claims history.

Workers’ comp premiums are calculated differently from most other business insurance. Understanding the factors that drive your rate helps you know what to expect — and where there may be room to manage costs over time.

Payroll

Workers’ comp is priced per $100 of payroll. The more employees you have and the more you pay them, the higher your base premium. Most policies are audited at year-end to true up actual payroll against the estimate used at policy inception.

Classification Code

Every type of work is assigned a code that reflects the risk level of that job. A desk worker has a much lower rate than a roofer or tree trimmer. Businesses with employees in multiple roles may have multiple codes on one policy. Getting classifications right matters for both cost and coverage accuracy.

Experience Modification Rate (EMR)

After a few years in business, your claims history generates an experience modifier — a multiplier applied to your base premium. Below 1.0 means fewer claims than average and results in a discount. Above 1.0 means more claims and increases your premium. Workplace safety directly affects your long-term workers’ comp cost.

State and Industry Factors

Workers’ comp rates are state-regulated and vary by industry. Texas has its own approved rate schedules, and carriers may file for deviations. High-risk industries like construction, tree service, and roofing carry significantly higher base rates than lower-risk operations.

Payroll Audits

Most policies are written on estimated payroll and audited at year-end. If actual payroll was higher than estimated, you owe additional premium. If lower, you receive a credit. Starting with an accurate estimate reduces the likelihood of a surprise bill — something we review with every client at setup.

Subcontractor Exposure

If you use uninsured subcontractors, their payroll may be included in your audit — because if they’re injured without coverage, your policy may be their only recourse. Requiring subs to carry their own workers’ comp and collecting their certificates is both a cost management and risk management strategy.

Who Should Carry Workers’ Comp

If you have employees doing physical work, the answer is almost always: you.

The businesses that benefit most are those with employees doing hands-on or hazardous work — but any business with employees carries exposure. These are the industries where the coverage is most critical.

Contractors & Trades

Required by most GCs and commercial clients. Falls, tool injuries, and equipment accidents are among the most common and expensive workplace claims.

Landscaping & Outdoor Services

Equipment operation, chemical exposure, heat illness, and repetitive motion injuries are all workers’ comp claims. The outdoor trades have consistently high injury rates.

Tree Service

One of the highest fatality-rate industries in the country. A climber injured without workers’ comp coverage creates unlimited civil liability for the employer.

Restaurants & Hospitality

Burns, cuts, slips, and heavy lifting are daily realities in food service. Many commercial landlords require workers’ comp as a lease condition.

Pool & Spa Contractors

Excavation, electrical work, heavy lifting, and chemical handling all create injury exposure. Commonly required by commercial property managers before service contracts begin.

Retail & Service Businesses

Even lower-risk environments have slip-and-fall, lifting, and repetitive stress exposures. Without workers’ comp, any employee injury is potential civil litigation.

Manufacturing & Warehousing

Equipment operation, forklift accidents, and material handling injuries are among the most frequent and most expensive workers’ comp claims in any industry.

Any Business With Employees

The exposure exists wherever people work. The only question is whether a structured policy handles it — or whether an open-ended civil lawsuit does.

Why Get Your Workers’ Comp Through McKnight

Workers’ comp is more complex to shop than most business owners realize.

Workers’ comp isn’t a commodity product where every carrier offers the same thing at a slightly different price. Classification codes, payroll audits, experience modifiers, and state-filed rates all interact to create significant pricing variation from one carrier to the next — especially in higher-risk industries. An independent agency with carrier relationships across the market can find meaningful differences in both price and coverage terms.

We also help clients avoid the two most common workers’ comp mistakes: misclassified employees that create coverage gaps or inflated premiums, and uninsured subcontractors that end up on your audit as additional payroll exposure. These are details that require attention at policy setup — not after an audit bill arrives.

Beyond placement, we’re here when a claim happens. Workers’ comp claims are managed through a defined process — first report of injury, medical treatment, return-to-work coordination. Having an agent who can answer your questions quickly matters when an employee is injured and you need to know what to do next.

100+ carriers — class-specific shopping
Workers’ comp rates vary significantly by carrier for the same classification. We find the best rate for your industry and payroll profile.

Classifications reviewed before binding
We verify your employee classifications are accurate before placing the policy — wrong codes mean wrong coverage and wrong pricing.

One account manager for your full program
Your workers’ comp sits alongside your GL, auto, and property — one person sees the full picture and knows your business.

Real answers when a claim happens
817.277.6166, weekdays 8:30–5pm. When an employee is injured, we walk you through the next steps.

FAQ

Workers’ compensation questions we hear all the time.

Is workers’ compensation required in Texas?
Texas is the only state in the country that does not require most private employers to carry workers’ compensation insurance. However, some must carry it regardless — contractors working on government projects, certain licensed industries, and businesses whose contracts require it. More importantly, employers who opt out lose significant legal protections. Non-subscribing employers cannot assert contributory negligence as a defense when sued by injured employees, and there’s no cap on civil damages. Opting out of workers’ comp in Texas is a choice to accept unlimited civil liability for workplace injuries.
What does workers’ compensation actually pay for?
Workers’ comp pays for medical treatment, lost wages (typically around two-thirds of regular pay while unable to work), permanent disability benefits for lasting impairment, vocational rehabilitation if the employee can’t return to their previous role, and death benefits to surviving dependents if a fatality occurs. It also covers occupational illnesses that develop over time from work exposure — not just acute injuries from a single incident. In exchange for these benefits, the employee gives up the right to sue the employer for negligence in most circumstances.
Does my general liability insurance cover employee injuries?
No — general liability explicitly excludes bodily injury to employees of the insured. GL covers third parties — customers, clients, bystanders — not your own workforce. This is one of the most common misunderstandings in small business insurance. An employer who relies on GL to cover a workplace injury will find out at the worst possible moment that it doesn’t. Workers’ comp is the only coverage designed for this specific exposure.
How is workers’ comp premium calculated?
Workers’ comp premiums are calculated based on your payroll, your classification codes, and your experience modification rate. The base rate is set per $100 of payroll for each job classification — a roofer has a much higher rate than an office worker. Your experience modifier adjusts that rate up or down based on your claims history compared to industry averages. Most policies are written on estimated payroll and audited at year-end.
What is a payroll audit and will it affect my premium?
Most workers’ comp policies are written on estimated payroll and audited at year-end. If your actual payroll was higher than estimated — because you hired more people, paid more overtime, or grew your business — you’ll owe additional premium. If it was lower, you’ll receive a credit. Starting with an accurate estimate reduces surprise bills at year-end. We walk through payroll estimation with every client when setting up their policy.
Do I need workers’ comp if I use subcontractors instead of employees?
It depends on whether your subcontractors carry their own workers’ comp. If a sub has their own coverage, they’re generally not your exposure. If they don’t, their payroll may be included in your audit — and if they’re injured, your policy may be their only recourse. The practical answer: require every subcontractor to carry their own workers’ comp and collect certificates before they start work. This protects you from the liability exposure and from unexpected audit additions.
What is an experience modification rate and how does it affect my cost?
An experience modification rate — called an EMR or mod — is a multiplier applied to your base premium based on your actual claims history compared to the average for your industry. An EMR of 1.0 is average. Below 1.0 means fewer claims than average and results in a premium discount. Above 1.0 means more claims and results in a surcharge. Investing in workplace safety is one of the most direct ways to reduce workers’ comp costs over time.
What do I do when an employee is injured?
Get the employee medical attention immediately — that always comes first. Then report the injury to your workers’ comp carrier as soon as possible. Most carriers have deadlines for first report of injury, and late reporting can complicate the claims process. Document what happened, gather witness accounts if applicable, and keep records of the medical treatment and time lost. Call us when an injury happens and we’ll walk you through the process step by step.
Can I get workers’ comp if my business has had claims in the past?
Yes — businesses with prior claims can still obtain workers’ comp, though a poor claims history will affect your experience modifier and premium. Businesses with significant claim history may find fewer carriers willing to write them in the voluntary market — but the state’s assigned risk pool exists specifically for employers who can’t find coverage elsewhere. We have access to carriers that specialize in higher-risk accounts and will be upfront about what the market looks like for your situation.

Get Started

Let’s make sure your employees are covered — and your business is protected if they’re hurt.

Call us or request a quote. We’ll shop across carriers, review your classifications, and make sure your workers’ comp program is structured correctly from day one.

McKnight Insurance Services  ·  Mansfield, TX  ·  Same-day certificates  ·  Weekdays 8:30am–5pm