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Texas business insurance: requirements and costs

In Texas a private employer may choose not to carry workers' compensation: the Labor Code makes coverage elective except for public employers, and TDI says it is not required in most cases.⁠5⁠6 Employers that do buy it pay rates built from NCCI advisory loss costs, which the Texas Department of Insurance (TDI) accepted at an average 3.8% decrease for policies effective July 1, 2026.⁠1 The price of opting out is legal: a nonsubscriber loses three standard defenses if an injured employee sues.⁠5

Checked against 12 sources Last reviewed How we check figures

Texas at a glance

Workers’ comp requiredElective for private employers; required for public employers
Where employers buy itPrivate insurers; coverage is elective
Rates set byNational Council on Compensation Insurance (advisory organization to TDI)
Employer comp cost, 2023$0.39 per $100 of covered wages (US $0.98)
Comp rate index, 2024$0.78, ranked 40 of 51 (1 = most expensive)
Employer health premium, 2025$8,543 single, $25,053 family (average total premium)
Auto liability minimum30/60/25

Texas has no monopolistic fund and no bureau-filed rates. Under Insurance Code s. 2053.003 every insurer files its own rates with TDI, and under s. 2053.051 it must use the hazard classes the department establishes.⁠3 NCCI acts as an advisory organization to TDI and files advisory loss costs for each class. An insurer then multiplies a class's loss cost by its own loss cost multiplier (LCM), which covers its commissions, profit and taxes.⁠2 TDI's rate guide gives an example: a July 1, 2026 loss cost of 1.946 for code 5551 (roofing) times an LCM of 1.50 gives a rate of 2.919 per $100 of payroll.⁠2 By our calculation, $100,000 of roofing payroll at that rate costs $2,919 before any experience modification or schedule credit. TDI's guide says an insurer may instead file its own company-specific relativities, and that an experience modifier and schedule debit or credit may adjust the premium, so the rate basis, the LCM, the mod and schedule rating all separate one Texas quote from another.⁠2 Texas Mutual Insurance Company, a domestic mutual insurer governed by its own chapter of the Insurance Code, must act as a competitive force and as insurer of last resort, but it is not a state agency.⁠4

The latest decision is TDI Bulletin B-0001-26: it accepted NCCI's filing for policies effective on or after July 1, 2026, an overall average 3.8% decrease in loss costs. Insurers may not use 2025 or earlier loss costs for those policies.⁠1 Because it is a loss-cost change, it is not a promised premium change: a Texas employer paying $10,000 would pay $9,620 only if its class moved exactly with the average and its insurer kept the same LCM, payroll and mod (our calculation). The official cost data show Texas well under the national level. NASI estimates Texas employers spent $0.39 per $100 of covered wages in 2023, down 25% from $0.52 in 2019 (our calculation), against $0.98 nationally, which fell 16%.⁠10 Oregon's study of rates in effect January 1, 2024, ranked Texas 40th of 51 jurisdictions most expensive, at an index of $0.78 per $100 of payroll, 72% of the median state. Louisiana ($1.41, 9th) and Oklahoma ($1.33, 15th) rank far higher, and Arkansas ($0.53) is 50th.⁠11 Health costs are different: AHRQ's 2025 survey found 28.2% of Texas private-sector establishments in firms with fewer than 50 employees offered health insurance, against 32.1% nationally. Where they did, the average single premium was $8,737 against $9,034 nationally.⁠12

For a Texas employer the first decision is whether to subscribe. If you carry no coverage, you must notify the Division of Workers' Compensation, tell each new employee in writing at hire, and post a notice in the workplace; failing to do so is an administrative violation.⁠5⁠7 If an employee is hurt and sues, you cannot argue contributory negligence, assumed risk or a co-worker's negligence.⁠5 If you hold a public contract or a customer demands it, coverage may be effectively compulsory: see the construction note below. Subscribers buy from any licensed insurer, from Texas Mutual, or by self-insuring, and the hazard classes are fixed by TDI while rates are not, so compare quotes by class assignment and LCM, not by headline premium.⁠3⁠5

Workers’ compensation in Texas

No private employer must carry workers' compensation: the Labor Code says an employer may elect coverage, except for public employers.⁠5⁠6 Private employers that skip coverage are called nonsubscribers and must report that to the state.⁠6⁠7 Building or construction contractors on public projects must certify that they cover their employees, and subcontractors must give the general contractor the same certificate.⁠5

Who is exempt

  • Private employers may opt out entirely and become nonsubscribers, but must file notice with the Division of Workers' Compensation and notify employees

Buying coverage and who sets the rates

Employers buy from a licensed insurance company or self-insure as the Labor Code provides.⁠5 Texas Mutual Insurance Company is a statutory mutual that must serve as a competitive force, guarantee availability and act as insurer of last resort.⁠4 Insurers file their own rates, each using either its own company-specific relativities or NCCI advisory loss costs times a filed LCM.⁠1⁠2⁠3

Latest rate decision (1 Jul 2026): TDI accepted NCCI's advisory loss cost filing with an overall average 3.8% decrease for policies effective on or after July 1, 2026 (Commissioner's Bulletin B-0001-26). Insurers must base rates on those loss costs or on their own relativities, not on earlier years. Official notice.

An employer may obtain coverage through self-insurance as provided in the Labor Code.⁠5

Penalties for going without

Skipping coverage is lawful, but a nonsubscriber that fails to file its notice of no coverage with the division, or to notify and post notices for employees, commits an administrative violation.⁠5 Nonsubscribers also lose the defenses of contributory negligence, assumed risk and fellow-employee negligence in employee injury suits.⁠5

What Texas employers pay

Employer workers’ compensation costs per $100 of covered wages, 2019–2023
YearTexasUnited States
2019$0.52$1.17
2020$0.46$1.08
2021$0.41$1.01
2022$0.41$1.00
2023$0.39$0.98

Employer cost per $100 of covered wages: premiums paid by insured employers plus benefits and administrative costs of self-insured employers, divided by the wages of workers covered by workers’ compensation. The United States figure is NASI’s national total, which includes federal programs. Source: National Academy of Social Insurance (NASI), published 11 Aug 2026.

Oregon’s biennial comparison of workers’ comp rates puts Texas’s index for rates in effect on 1 January 2024 at $0.78 per $100 of payroll, 28% below the national median of $1.09 (rank 40 of 51, where 1 is the most expensive). The index prices the same 50 risk classes, weighted by Oregon payroll, in every state, so it compares rate levels rather than what employers actually pay. Compare every state.

Employer health insurance in Texas

Average annual premium per enrolled employee at private-sector employers, 2025
MeasureTexasFirms under 50United States
Single coverage, total premium$8,543$8,737$9,025
Family coverage, total premium$25,053$21,949$26,281
Employee share, single$1,638–$1,817
Employers offering coverage49.0%28.2%49.2%

Average total annual premium per enrolled employee at private-sector establishments that offer health insurance; the offer rate is the share of establishments offering coverage. Small firms have fewer than 50 employees. Source: Agency for Healthcare Research and Quality (AHRQ), Center for Financing, Access and Cost Trends, 2025 survey year. All states.

Commercial auto in Texas

Every vehicle registered in Texas, including business vehicles, must carry at least 30/60/25 in liability limits (bodily injury per person / per accident / property damage, in thousands of dollars). Official source.

Minimum financial responsibility limits since Jan. 1, 2011 are $30,000 per person and $60,000 per collision for bodily injury, and $25,000 for property damage.⁠8 An auto liability policy must include personal injury protection and uninsured/underinsured motorist coverage unless the named insured rejects it in writing.⁠9 No 2025-2026 change to the limits was found.

Trucks and buses used in interstate commerce must also meet federal minimums of $750,000 to $5 million: see commercial auto minimums and what commercial auto costs.

Other Texas rules that affect insurance costs

Public contracts make comp mandatory in practice

A governmental entity that enters a building or construction contract must require the contractor to certify in writing that it covers every employee on the public project. Each subcontractor gives its certificate to the general contractor, who passes it to the governmental entity.⁠5

Nonsubscriber notices and reports

A nonsubscriber must file a notice of no coverage with the division: between February 1 and April 30 each year, after hiring its first employee, and after ending a policy. It must also post a notice at work and give new hires written notice. Employers with five or more employees must report injuries with more than one day of lost time.⁠6⁠7 TDI's nonsubscriber page lists these duties but states no dollar penalty.⁠7

Loss costs are not premiums

TDI sets the hazard classes and NCCI supplies the loss costs, but insurers set their own LCMs, tiers and schedule rating limits.⁠2⁠3 The rate guide lists each filer's LCM and the maximum schedule debit and credit it has filed, so you can compare filings before requesting quotes.⁠2

Texas compared with its neighbors

Workers’ comp and health insurance costs, Texas and neighboring states
Texas$0.39$0.78$8,543
New Mexico$0.98$1.05$9,447
Oklahoma$0.91$1.33$8,124
Arkansas$0.57$0.53$7,804
Louisiana$1.27$1.41$8,806

Sources

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National figures: NASI (employer comp costs), Oregon DCBS (rate index), AHRQ MEPS-IC (health premiums).

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Other states

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