About workers' compensation

The best way for Texas employers to protect their employees is by providing workers' compensation insurance. Here are some of the most frequently asked questions about providing coverage.

What are the benefits of workers' compensation insurance?

  • Workers' compensation insurance pays all reasonably required medical bills for a work-related injury.
  • Workers' compensation insurance replaces some lost wages and compensates the employee for permanent impairment caused by a compensable work-related injury. Any benefits are based on the injured employee's income loss and the severity of the injury. Income benefit payments are a percentage of the employee's pre-injury salary, up to a limit tied to the statewide average weekly wage in manufacturing.
  • If an employee is killed on the job as a result of a compensable injury, workers' compensation insurance pays benefits to qualifying beneficiaries and covers actual burial costs, up to $6,000.
  • Workers' compensation insurance protects employers against lawsuits by injured employees and pays legal defense costs and indemnity (payment for losses) in gross negligence death cases.
  • Workers' compensation insurance benefits society by helping injured employees and their families, instead of forcing them into the welfare system.

Does my business really need workers' comp?

Yes. There is no real match for the protection provided by workers' compensation insurance. Under Texas law, an employer's liability is limited only by providing workers' compensation insurance coverage from a licensed insurance company or by being certified to self-insure by the Division of Workers' Compensation. (This option is available only to large employers who meet stringent requirements.)

What could "going bare" cost my business?

The answer is simple:  It could cost you your whole business. You could bear complete financial responsibility for an employee's injury or death if you are found negligent. The total amount you could be responsible for is unlimited.

What about "alternatives" to workers' compensation?

Insurance companies are not allowed to represent other policies as a substitute for workers' compensation insurance. However, some Texas employers think they have found a cheaper alternative to workers' compensation coverage when they purchase life, accident and health or disability policies. However, the insurance company may cover only a fraction of the total judgment in many work injury cases.

What if I buy insurance from an unlicensed company or a company doing business on a surplus lines basis?

You lose much of the protection provided by a policy from a licensed carrier.

How do I find out if a company is licensed?

Call the Texas Department of Insurance at (512) 463-6500 or (800) 252-3439. Texas Mutual Insurance Company is a licensed company.