General Liability vs Workers' Comp in Texas

The short answer: two policies, two different people

General liability covers claims by other people: customers, the public, a property owner whose house you damaged. Workers' comp covers your employees hurt on the job.

Sources: Texas Department of Insurance commercial general liability page and workers' compensation guide.

Does general liability cover employee injury?

No. A standard commercial general liability policy excludes bodily injury to your own employees that arises from their work, and it excludes workers' compensation obligations. The Texas Department of Insurance says CGL policies are not intended to cover workers' compensation or employer's liability. Employee injuries belong on a workers' comp policy, not on general liability.

What about subcontractors and temp workers?

An uninsured subcontractor's worker can come back on you through your contracts, your audit, and how your policy defines "employee". Leased workers are usually treated as employees, and temporary workers are treated differently. Check your own policy, and collect certificates from every sub. Our contractor insurance in Texas page covers audit charges for uninsured subs.

The "insured contract" exception

The employer's liability exclusion in a CGL policy doesn't apply to liability you take on under an "insured contract". That's one reason the indemnity wording in a subcontract matters. Have an attorney read it; this isn't legal advice.

Is workers' comp required in Texas?

Not for most private employers. Texas lets private employers choose whether to carry workers' comp, and those that don't are called nonsubscribers. Governmental entities must carry it, and contractors on public building or construction projects must cover their employees and their subs' employees. Many private general contractors and customers also require it by contract.

The public-project rule is in Texas Labor Code §406.096. Master service agreements, general contractors and some landlords often require comp even on private work.

TDLR-licensed trades

Electrical contractors file proof of general liability with TDLR. TDLR's electrical contractor rules accept proof of workers' comp, a certificate of authority to self-insure, or a statement that the contractor elected not to carry comp.

What a Texas nonsubscriber gives up

An injured employee can sue you, and you lose key defenses. Under Texas Labor Code §406.033, a nonsubscriber can't argue that the employee's own negligence, a co-worker's negligence, or assumed risk caused the injury. You must also file DWC Form 005 every year between February 1 and April 30 and give employees written notice.

You can still defend on the grounds that the employee was intoxicated or meant to injure themselves (§406.033(c)), and the employee still has to prove you were negligent (§406.033(d)). A waiver an employee signs before an injury is void (§406.033(e)). By contrast, TDI says carrying comp limits your liability if an employee sues, except when gross negligence causes a death.

What a Texas nonsubscriber must do

• File every year. DWC Form 005 says nonsubscribers file their notice between February 1 and April 30 of each calendar year, and also when coverage ends. TDI accepts it online.
• Tell employees in writing. Give new employees written notice that you don't carry comp, and post Notice 5 at the workplace "in English, Spanish, and any other language that is appropriate," where employees can see it regularly (DWC Form 005; Labor Code §406.005; 28 TAC §110.101).
• Report injuries. DWC Form 005 says employers with five or more employees report monthly on DWC Form 007 any work-related illness, and any work-related injury that causes an employee to miss one or more days of work or results in death.
• Know the stakes. Missing these duties is an administrative violation (Labor Code §406.004(e), §406.005(e)). Texas Labor Code chapter 415 sets administrative penalties of up to $25,000 per day per occurrence.

Nonsubscriber plans and employer's liability (what they are and aren't)

This section is general information only. We don't offer nonsubscriber occupational injury plans.

The Texas Department of Insurance says alternative policies, and coverage bought from unlicensed companies, are not workers' compensation. They don't restore your protection from lawsuits, and they have dollar and time limits. Occupational accident or injury benefit plans pay set benefits to injured workers. Employer's liability-type coverage for nonsubscribers can pay defense costs and damages if an employee sues. Neither one gives back the defenses a nonsubscriber loses. Texas Labor Code §406.052(b) allows this kind of coverage only if it isn't represented as workers' compensation.

Subscriber, nonsubscriber, or "it depends on the contract"

A checklist to think through, not advice:

• Do you bid public building or construction work?
• Do your general contractors or master service agreements require comp?
• How many employees do you have, and what work do they do? Roofing isn't office work.
• Could the business absorb an employee lawsuit?
• Do you pay 1099 subcontractors who could be treated as employees?

TDI keeps a lookup of licensed workers' comp carriers, and Texas has an insurer of last resort for employers who can't find coverage elsewhere (TDI workers' compensation guide). Oilfield crews: operator MSAs usually require comp and employer's liability; see oilfield service insurance.

How to get workers' comp in Texas

TDI says you need at least one employee to buy a policy, and part-time employees count. Some carriers will cover executive officers with no other employees. Under Labor Code §406.097, when a business carries comp, its sole proprietors, partners and corporate officers are covered as employees unless the policy specifically excludes them by endorsement. Buy only from a company licensed by TDI.

After that, premium is built on payroll by class code, and the carrier audits payroll at year end. We can quote general liability, workers' comp and commercial auto together. More: Texas commercial insurance, coverages we place and New Braunfels business insurance.

General liability vs workers' comp FAQ