Texas: The Non-Subscriber State
Texas is unique among US states in that it does not legally require most private employers to carry workers' compensation insurance. This makes Texas a 'non-subscriber' friendly state, where employers can choose to opt out of the workers' comp system. Approximately 20-30% of Texas employers are non-subscribers.
For plumbing contractors, this raises an important question: if workers' comp isn't legally required, should you carry it? The answer for most plumbing contractors is a resounding yes — and here's why.
The Risks of Going Without Workers' Comp
While Texas law allows you to operate without workers' comp, doing so comes with significant risks:
1. Loss of Legal Defenses: Non-subscribers lose the ability to use three critical common-law defenses in employee injury lawsuits: contributory negligence (the employee's own carelessness contributed to the injury), fellow servant doctrine (a co-worker's negligence caused the injury), and assumption of risk (the employee knew the job was dangerous). Without these defenses, you're much more likely to lose an employee injury lawsuit.
2. Direct Lawsuit Exposure: Without workers' comp, injured employees can sue you directly in civil court for damages, including pain and suffering, lost wages, medical bills, and punitive damages. A single serious injury lawsuit could result in a judgment of $500,000 to $1,000,000 or more.
3. Personal Asset Exposure: If your plumbing business is a sole proprietorship or partnership, a judgment from an employee injury lawsuit could reach your personal assets — your home, savings, and other property.
4. Regulatory Requirements: Non-subscribers must file an annual notice with the Texas Department of Insurance (DWC Form-005) and post notices in the workplace informing employees that the company does not carry workers' comp.
When Workers' Comp Is Practically Required
Even though Texas law doesn't mandate workers' comp for most private employers, many plumbing contractors find it's practically required for business reasons:
General Contractor Requirements: Most general contractors require their subcontractors to carry workers' compensation insurance. If you want to work as a subcontractor on commercial or new construction projects, you'll almost certainly need workers' comp.
Commercial Client Requirements: Many commercial property owners, facility managers, and corporate clients require workers' comp from all contractors working on their properties.
Government Contracts: Federal, state, and local government construction projects typically require workers' compensation from all contractors and subcontractors.
Lease Requirements: Some commercial landlords require tenants to carry workers' comp as a condition of the lease.
Lender Requirements: If you have business loans or lines of credit, your lender may require workers' comp as a condition of the financing.
The Real Cost of Plumbing Injuries
Plumbing is physically demanding work with real injury risks. Consider the potential costs of common plumbing injuries without workers' comp coverage:
Back Injury from Heavy Lifting: Surgery and rehabilitation can cost $80,000 to $150,000, plus months of lost wages. Without workers' comp, you'd pay these costs directly or face a lawsuit.
Burn from Soldering Torch: Emergency treatment and follow-up care for serious burns can cost $15,000 to $50,000.
Trench Collapse: A serious trench collapse injury can result in medical bills exceeding $200,000 and permanent disability.
Fall from Ladder: A fall resulting in a broken bone or head injury can cost $30,000 to $100,000 in medical treatment.
These are not hypothetical scenarios — they happen to plumbing contractors every year. Without workers' comp, the financial burden falls directly on your business.
Workers' Comp Costs for Plumbing Contractors
Workers' compensation premiums for plumbing contractors are based primarily on payroll, using NCCI Class Code 5183 (Plumbing). The base rate in Texas is approximately $2.19 per $100 of payroll. Here's what that looks like in practice:
$100,000 annual payroll: ~$2,190 base premium $200,000 annual payroll: ~$4,380 base premium $500,000 annual payroll: ~$10,950 base premium
Your actual premium will be adjusted by your Experience Modification Rate (EMR), which reflects your company's claims history compared to the industry average. A good EMR (below 1.0) will reduce your premium, while a poor EMR (above 1.0) will increase it.
For most plumbing contractors, the cost of workers' comp is a small fraction of total payroll — and far less than the potential cost of a single serious employee injury without coverage.
Our Recommendation
For virtually every plumbing contractor with employees, we strongly recommend carrying workers' compensation insurance. The cost is manageable, the protection is essential, and the practical business requirements make it a near-necessity for any contractor who wants to grow beyond small residential service work.
If you're a solo plumber with no employees, workers' comp is less critical — but you should still consider it if you use subcontractors (who may need to be covered under your policy) or if you want to work as a subcontractor for general contractors who require it.
The bottom line: Texas may not legally require workers' comp, but the combination of lawsuit exposure, business requirements, and the real risk of plumbing injuries makes it one of the most important coverages a plumbing contractor can carry.