Texas is an interesting state. It’s one of the two states in the USA that doesn’t require employers to carry workers’ compensation insurance. The other 48 states fine any business a hefty amount when they don’t carry it.

Texas government employees are covered by the Texas Workers’ Compensation program. Other Texas employers can also participate, but some may choose to opt out of the program because they think the premiums are too high and they can do better with alternative insurance policies.

But these businesses—who may have as many as 500 or more employees—after saying no to participating in the state program, choose not to purchase their own alternative policies. Texas state law requires that they must let workers know when hiring them that they won’t be covered through the business itself. What results is that workers have a choice to either participate in the state workers’ comp program individually or no program at all.

But there’s the rub for employers. If they do not have their own alternative workers’ comp policy, and they hire an employee who chooses not to go with the Texas state workers’ comp insurance, they lose certain rights. If an injury occurs, the employee has the right to sue the business and the business loses the right to argue in court that the injured worker’s negligence or another worker’s negligence caused the injury, or that the worker was aware of the danger. This could mean a large settlement—sometimes in the millions.

So, obviously, businesses are smart to go with their own alternative policy. Contact Koch Insurance Group for more information.