Texas is the only state in the country where workers' compensation is technically optional. Contractors can legally operate as a "non-subscriber," forgoing WC and taking on unlimited tort exposure to employee injury claims. In practice, almost every commercial GC in Texas requires WC from subs, and going non-subscriber is a viable choice only for small, low-hazard operations with strong alternative injury-benefit programs.
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Every state regulates commercial insurance differently. Here's what matters for workers' comp in Texas.
Electing not to carry WC means an injured employee can sue without the comp-exclusive-remedy bar. Tort damages are uncapped. Most contractors who go non-subscriber buy an alternative injury-benefit plan (ERISA-based) to soften the exposure, but GC contracts still typically require WC regardless.
Commercial GCs in Dallas, Houston, Austin, and San Antonio almost universally require subs to carry traditional TX WC. The legal option to go non-subscriber doesn't help if it locks you out of commercial work.
Texas Mutual Insurance Company writes roughly 40% of Texas WC. Rates are competitive, but they're selective on high-hazard classes (roofing, demolition). For those, the E&S market takes over.
Rates vary meaningfully by state because class codes, litigation climate, medical costs, and regulatory requirements all differ. Here's the Texas picture.
For subscribers (contractors who do carry WC), TX rates are moderate — lower than NY/NJ/CA but higher than flyover states. Roofing rates run $15-$22 per $100 payroll; inside electrical $3-$5. The Texas Mutual (the state's largest carrier) writes a significant share of the market and is a competitive option for most standard contractor classes.
Core coverage is the same nationwide. Texas-specific regulations layer on top of these baseline protections.
Emergency room, surgery, follow-up care, physical therapy, prescriptions, and long-term rehab when a crew member is injured while working. No deductible to the employee.
Partial wage replacement while the injured worker is off the job — typically around 66% of weekly wages, subject to state maximums and waiting periods.
If an injury leads to permanent impairment, the policy pays scheduled benefits based on the body part or percentage loss as defined in the state fee schedule.
Funeral expenses and ongoing benefits to the spouse and dependents if a worker is killed on the job. State statutes govern the benefit structure.
Protects you from tort suits brought by an employee (or the employee's spouse) that fall outside the comp-exclusive remedy. $500K / $500K / $500K is standard baseline.
Carrier handles the whole file — claim intake, medical case management, return-to-work coordination, settlement negotiation, and appeal if contested.
| Factor | Impact | Detail |
|---|---|---|
| Class code (trade) | Major | Single biggest driver. Roofing at $15-$25 per $100 payroll; inside electrical around $3-$6; clerical under $1. Your class code IS your premium. |
| Annual payroll | Major | Premium is charged per $100 of payroll. More payroll = more premium, proportionally. |
| Experience mod (ex-mod) | Major | After three years, your historical claim frequency and severity produces an ex-mod that multiplies your premium. 1.00 is neutral; 0.80 gets a 20% discount; 1.30 adds 30%. |
| State | Moderate | States have monopolistic funds (WA, OH, ND, WY) vs. open markets. Rates, assessments, and statutes vary widely. |
| Claims history | Moderate | Five-year loss run determines carrier appetite and pricing. Multiple open indemnity claims narrow the market. |
| Owner inclusion/exclusion | Minor | Including owners adds payroll to the calculation. Excluding them drops it but removes their coverage. |
| Safety program & training | Minor | Formal safety program, OSHA training records, and drug testing can unlock 5-10% credits and move you into standard markets. |
Texas-specific questions first, then the general workers' comp questions.
Legally, no — Texas is the only state where WC is optional. But commercial GCs almost universally require WC from sub-contractors, so in practice most Texas contractors do carry it. Going non-subscriber only makes sense for small, low-hazard operations with strong alternative injury-benefit programs.
A non-subscriber plan is a contractor-sponsored injury-benefit program (usually structured under ERISA) that pays medical and wage-replacement benefits for work-related injuries, similar to WC but administered by the contractor and a TPA. Non-subscribers don't have the tort-exclusive-remedy protection that WC provides, so they're exposed to direct employee lawsuits.
Every state except Texas requires WC once you have W-2 employees. Even Texas, while technically optional, leaves you exposed to unlimited tort liability if you don't carry it — and most general contractors won't sub to an uninsured shop. If you have even one W-2 employee doing trade work, you need it.
If a 1099 sub carries their own WC and provides a certificate, they don't hit your policy. But if a sub is uninsured and gets hurt on your job, most states make you the statutory employer — meaning the claim falls on your policy. Always collect and verify sub COIs before they start work.
WC premium = (annual payroll ÷ 100) × class rate × experience mod. Rates range from under $1 per $100 for clerical to $25+ for roofing. A $1M payroll general contractor with a 1.00 ex-mod and a mid-range blended class rate typically pays $25,000 – $60,000 per year. Roofers and demolition contractors pay materially more.
After three years of claim history, NCCI (or your state's bureau) calculates an ex-mod — a multiplier applied to your premium. 1.00 is neutral; anything below 1.00 earns you a credit (fewer / smaller claims than peers); anything above 1.00 adds a debit. A 0.80 ex-mod saves 20% of premium; a 1.30 ex-mod costs 30% extra. It's the biggest single lever you can pull over time.
Most states allow sole proprietors, LLC members, and corporate officers to exclude themselves — which drops them from the payroll calculation and lowers premium. But excluded owners have no WC coverage for their own injuries. If you exclude yourself, make sure you carry health insurance and disability coverage to fill the gap.
A ghost WC policy covers a business with no employees (or only excluded owners), purely so you can provide a WC certificate to GCs that require it. It's cheap — often $800-$1,500 per year — and solves the common problem of being uninsurable-by-contract without actually needing coverage.
The going-and-coming rule generally excludes ordinary commuting. But if you're driving between job sites, running an employer errand, or carrying tools to the site as part of the job, the injury is typically covered. Facts matter — each claim gets investigated.
WC covers employee injuries. GL covers third-party claims. They are mutually exclusive. Every contractor needs both, and neither one substitutes for the other. GC contracts almost always require certificates showing both.
A single large claim ages into your ex-mod calculation over three years. Severity hurts, but frequency hurts more — three small claims often raises the ex-mod more than one large one. This is why return-to-work programs and early claim management matter financially even for minor injuries.
Most states require WC for family employees the same as any employee, though some states carve out exemptions for spouses and minor children. Check your state's specific rule — we'll verify at bind.
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