Employers in the Lone Star State can choose whether or not to provide Workers’ Compensation, with the latest figures from the Texas Department of Insurance (TDI) showing that 81% of Texas employees are covered by Workers’ Compensation insurance. Of those who don’t have coverage, about 70% have some type of private occupational insurance. The remaining 30% without some sort of Workers’ Compensation adds up to at least 500,000 people.

Workers’ Compensation is a state-regulated insurance system that provides covered employees with income and medical benefits if they are injured on the job or have a work-related injury or illness. Workers’ Compensation insurance coverage also limits an employer’s liability if an employee brings suit against the employer for damages.

Preferred Insurance is here to help guide you through the process of purchasing Workers’ Comp coverage and the other alternatives available to your business in Texas. We will help you weigh your options and decide which route is best for you, your business, and your employees.

Pros vs. Cons of Workers’ Comp Insurance

As a Texas employer, if you choose not to carry Workers’ Compensation insurance coverage, you must be aware of the following:

  • You risk the possibility of losing certain statutory defenses and could be held responsible automatically.
  • Employers without Workers’ Compensation coverage are required to report their non-coverage status and work-related injuries and occupational diseases to TDI’s Division of Workers’ Compensation (TDI-DWC).
  • Employers without Workers’ Compensation might have to pay punitive damages if they lose a lawsuit. They also lose certain common-law defenses, such as arguing that:
    • The injured worker’s negligence caused the injury.
    • The negligence of fellow employees caused the injury.
    • The injured worker knew about the danger and voluntarily accepted it.

If you are a Texas business owner with Workers’ Compensation insurance coverage, consider the following:

  • Employers with Workers’ compensation coverage are required to report all known occupational disease and any work-related injuries that result in more than one day of lost time.  Employers that fail to meet these requirements commit an administrative violation and may be subject to administrative penalties.
  • Employers with Workers’ Compensation have some important legal protections, including immunity from most lawsuits by injured workers.  If an employer has Workers’ Compensation insurance, a lawsuit may go to court after it’s been through TDI’s administrative dispute process. The court will consider TDI’s recommendations, and only issues in dispute may be used as evidence. Resolved issues cannot be reintroduced. The employer’s insurance company pays attorneys’ fees and other defense costs.

Determining Workers’ Comp Rates, Reviewing Your Policy & More

Workers’ Compensation insurance rates are based on job descriptions and the total payroll for each description. Any changes in the payroll or types of jobs can result in a change in premium. Our staff at Preferred can conduct a comprehensive review of all your documents, including your current Workers’ Comp policy, your experience modification worksheet, payroll audits, and loss-sensitive rating adjustments, to see where we can make improvements and where there may have been problems or miscalculations.

In addition, along with our insurance carriers, we can provide assistance in setting up an accident investigation program, safety programs, and more to help reduce on-the-job accidents and injuries and get employees back to work as soon as possible. We will also work with you to pinpoint red flags that may indicate where your business may be at risk for fraudulent claims.

Make Preferred Your Insurance Choice

The hallmarks of our success are our integrity, ethics, reliability and the value we place on our clients. We invite to learn more about us, and make Preferred your agency of choice. Give us a call at 888-943-5144 or email us at