Workers’ Compensation for Texas Contractors

Your crew is your most valuable asset. One serious injury on the jobsite can disrupt projects, harm reputations, and expose your business to costly legal actions. With the right Workers’ Compensation (Work Comp) insurance, you can protect both your employees and your business in Texas.

Unlike many states, Texas does not require most private employers to carry workers’ compensation insurance — it’s a voluntary system. But for contractors, even voluntary coverage is often a business necessity: many general contractors, municipalities, and project owners demand it. If you opt in, you gain access to legal protections, structured benefits, and risk mitigation. If you opt out (“non-subscriber”), you lose important defenses and expose yourself to lawsuits.

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What Workers’ Compensation Covers (in Texas)

When you carry a workers’ comp policy, you typically get:

• Medical expenses for injuries or occupational illnesses

• Temporary Income Benefits (TIBs): Partial wage replacement during healing

• Impairment Income Benefits (IIBs): Compensation for permanent impairment or disability

• Supplemental Income Benefits (SIBs): For ongoing wage loss after impairment

• Lifetime Income Benefits (LIBs): For catastrophic injuries (e.g. paralysis)

• Death & burial benefits for workers killed on the job

These benefits are governed by the Texas Workers’ Compensation Act (Labor Code Chapter 408) and associated administrative rules.

A key legal feature: for covered employees, workers’ compensation is the “exclusive remedy” against employer liability for job-related injury — meaning injured workers generally cannot sue you in civil court for negligence.

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Recommended Benefit Limits & Best Practices

Because Texas doesn’t impose a fixed dollar limit you must carry (for employer policies), the appropriate “limit” is often determined by policy contract structure and benefit caps. Below are best practices and benchmarks contractors should consider:

Best Practice Benchmarks

1. Full statutory benefit schedule
   Choose policies that fully support all benefit categories (TIBs, IIBs, SIBs, LIBs, death benefits) under the full Texas rules — do not accept truncated or limited “occupational injury” plans without legal review.

2. Adequate aggregate limits
   Policies should have sufficient aggregate limits to handle multiple claims or catastrophic events in the same policy year — e.g. $500,000 to $1,000,000 aggregate or more, depending on payroll and risk.

3. Medical-only or low-limits are risky
   Some alternate (non-comp) “medical-only” plans or benefit caps can leave you exposed if claims exceed limits. Opt for comprehensive coverage.

4. Align payroll classifications
   Use correct class codes for roofing, framing, plumbing, etc. Misclassifications drive undercoverage or audit surprises.

5. Exclude owners/partners if allowed
   Many contractors exclude owners or officers from coverage to reduce premium — this is acceptable if done properly via endorsements.

6. Safety & return-to-work incentives
   Policies that offer safety program credits or return-to-work incentives can lower your long-term costs.

Texas Benefit Caps (Current Examples)

Because benefit amounts are tied to the State Average Weekly Wage (SAWW), Texas sets maximums & minimums that adjust yearly. For example, for injuries occurring October 2024 – September 2025:

• Temporary Income Benefits (TIBs): max ~$1,219/week; minimum ~$183/week

• Impairment Income Benefits (IIBs): max ~$853/week

• Lifetime Income Benefits (LIBs) & Death Benefits: typically capped at SAWW for first year (~$1,219)

These numbers shift annually, so your policy should be flexible and responsive.

Real Contractor Scenarios

Example: When It Works

A framing contractor in Austin opted into workers’ compensation. A crew member fell through weakened decking and broke a leg. The policy covered surgery, physical therapy, and 70% of his lost wages during recovery under TIBs. Later, he received IIBs for a lasting leg impairment. Because the plan was properly structured, the injured employee could not sue the company in civil court.

When It Fails (Non-Subscriber Pitfall)

Another contractor in Houston chose not to subscribe to workers’ compensation. A worker was injured on a jobsite fall. Rather than resolving through the DWC process, the injured employee sued in civil court. Because the employer had no workers’ comp, they lost the “exclusive remedy” defense and faced high legal exposure.

Also, some non-subscriber employers attempt alternative injury benefit plans (“medical-only” or capped benefit plans). These often lack the robust statutory benefits and defenses, leaving gaps and legal vulnerability.

 

Safeguard your crew and your business. Get a customized Workers’ Compensation quote from EIS Texas today.

 

Why EIS Texas Recommends Workers’ Compensation

• Legal protection & peace of mind
  With coverage, most employee claims are handled through the DWC process, and you’re shielded from many civil suits.

• Bid eligibility & client confidence
  Many municipal or large commercial projects require proof of workers’ comp.

• Tailored coverage & policy audit support
  We analyze your payroll, trades, and safety record to structure the best plan for you.

• Claims support & network access
  We help manage claims and get injured workers back to work faster.

Even though Texas allows opting out, for artisan contractors in high-risk trades (roofing, framing, electrical, plumbing), workers’ comp is often not just smart — it’s essential.

Why Texas Contractors Choose EIS

• Local expertise — we understand Texas compliance, licensing, and jobsite requirements.

• Fast, accurate certificates of insurance (COIs) for project deadlines.

• Access to the top carriers in the nation.

• Personalized coverage based on your trade and your growth goals.

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Serving Contractors Across Texas

We proudly serve contractors in Dallas, Houston, Austin, San Antonio, Fort Worth, and beyond.