Burg Insurance Group of Texas

Texas Is the Only State Where Workers' Comp Is Optional for Most Private Employers

If you own a business in Texas and have employees, you've probably heard that workers' compensation insurance isn't required. That's technically true — Texas is the only state in the country where most private employers can legally choose not to carry it. But "optional" doesn't mean "unnecessary," and the gap between the two has ended businesses.

When a Texas employer decides not to carry workers' comp, they become what the state calls a "non-subscriber." And non-subscribers lose three critical legal defenses they would otherwise have if an injured employee files a lawsuit against them.

What Non-Subscribers Actually Give Up

Under Texas law, employers who do not carry workers' compensation coverage lose three common-law defenses that would otherwise be available to them in a workplace injury lawsuit:

Contributory negligence. You can't argue that the employee's own carelessness contributed to the injury. Even if the employee was partially at fault, that defense is off the table.

Assumption of risk. You can't argue that the employee understood the dangers of the job and accepted them by showing up to work.

The fellow-servant doctrine. You can't blame a co-worker's actions for causing the injury.

Without those defenses, the injured employee only needs to prove that your negligence — even just 1% of it — played a role. And if a jury agrees, there is no cap on the damages they can award. Medical bills, lost wages, pain and suffering, punitive damages — all of it is on the table with no ceiling.

The Real-World Cost of Going Without

Consider a scenario that plays out in Texas every year: A landscaping crew member is injured on a job site. The employer, a small operation with eight employees, doesn't carry workers' comp because the owner figured the premiums weren't worth it. The injured worker hires an attorney. Without the three defenses mentioned above, the employer's only option is to settle or go to trial. Either way, the cost runs well into six figures — and many small businesses simply don't survive it.

Meanwhile, the average cost of workers' compensation insurance in Texas is approximately $76 per employee per month for small businesses. For low-risk industries like professional services, consulting, or office-based work, that number drops to as little as $13 per employee per month. For a five-person professional services firm, we're talking about $65 a month — less than a team lunch.

2026 Rate Decrease Makes Coverage Even More Affordable

As of July 1, 2026, the Texas Department of Insurance accepted a 3.8% average decrease in advisory loss costs. That means if your policy renews on or after that date, you should be seeing lower rates — assuming your agent is quoting from the updated numbers. If they're not, it's worth asking.

Texas ranks as the fourth-largest workers' comp market in the country, and it's been consistently profitable for carriers. That stability means competitive pricing for employers, especially through an independent agency that can compare options across multiple carriers instead of being locked into one company's rate.

Who Is Required to Carry Workers' Comp in Texas?

While most private employers can legally opt out, there are important exceptions. Government entities and political subdivisions in Texas are required to maintain coverage. If you're a construction company working on public projects, workers' comp is mandatory. And increasingly, general contractors and commercial clients are requiring proof of coverage from every subcontractor before work begins — meaning that even if the state doesn't make you carry it, the market often does.

The Bottom Line for Cypress and Northwest Houston Business Owners

You're free to skip workers' comp in Texas. But doing so means accepting unlimited personal liability every time an employee gets hurt on the job. With 2026 rates lower than they've been in years and the ability to shop coverage across 30+ carriers through an independent agency, the question isn't whether you can afford workers' comp — it's whether you can afford not to have it.

Frequently Asked Questions

Is workers' comp required in Texas?

No. Texas is the only state where most private employers can legally opt out of workers' compensation insurance. However, government entities, political subdivisions, and construction companies working on public projects are required to carry coverage.

What happens if I don't carry workers' comp in Texas?

You become a "non-subscriber" and lose three key legal defenses: contributory negligence, assumption of risk, and the fellow-servant doctrine. An injured employee only needs to prove that your negligence played any role in their injury, and there is no cap on the damages a jury can award.

How much does workers' comp cost in Texas?

The average cost is approximately $76 per employee per month for small businesses. Low-risk industries like professional services may pay as little as $13 per employee per month. As of July 1, 2026, advisory loss costs decreased by 3.8%, making coverage even more affordable.

Can I shop workers' comp rates from multiple carriers?

Yes. An independent insurance agency like Burg Insurance Group can compare quotes from 30+ carriers to find the most competitive rate for your business, unlike a captive agent who can only offer one company's pricing.