Short answer: Texas is the one state where most private employers can choose not to carry workers' compensation. Employers who opt out (non-subscribers) must file a notice with the state, notify employees, and give up key legal defenses in injury lawsuits. Business vehicles need at least $30,000/$60,000 bodily injury and $25,000 property damage liability.
This guide is general information for Texas employers and business owners. It isn't legal advice. Agency rules change, so confirm with the agencies linked below.
1. Workers' compensation is optional, with strings attached
Per the Texas Department of Insurance, most private employers can choose whether to carry workers' comp. Non-subscribers must file DWC Form-005, post the required notice, and can be sued for workplace injuries without common-law defenses. Some government contracts require coverage. Details: is workers comp required in Texas.
2. Business vehicles
Per the TDI auto insurance guide, the minimum is $30,000/$60,000 bodily injury and $25,000 property damage. See commercial auto insurance.
State unemployment insurance
Unemployment insurance is the other employer coverage Texas makes mandatory. Per the U.S. Department of Labor's Significant Provisions of State UI Laws, January 2026, Texas employers are covered once you meet the coverage test of 20 weeks or $1,500 in any quarter. The 2026 taxable wage base is $9,000 per employee. Experience-rated employers pay 0.32% to 6.32%, and new employers start at a base rate of 2.70% (higher rates can apply by industry). Register with the state's unemployment tax agency when you hire.
Beyond the mandates
Most other coverage, like general liability, property, professional liability and cyber, comes from contracts, leases and lenders rather than Texas law. See small business insurance by industry or home-based business insurance. For-hire interstate carriers also face federal minimums under 49 CFR 387.9, starting at $750,000.
Questions? Contact Alishahi Insurance or call (877) 711-4545. See insurance in Texas.
Frequently asked questions
Is workers' comp required in Texas?
Not for most private employers. Non-subscribers must file notices and lose key lawsuit defenses.
What's the minimum auto liability for a Texas business vehicle?
30/60/25.
Do Texas employers have to pay for unemployment insurance?
Yes, once covered. The 2026 taxable wage base is $9,000, and new employers start at 2.70%.
Alishahi Insurance · 439 N Canon Dr, Penthouse, Beverly Hills, CA 90210 · (877) 711-4545 · CA License #4348151. General information only. This isn't legal, tax or financial advice or a coverage determination. Coverage depends on policy language and underwriting, and rules vary by state.