Workers’ comp in Texas typically costs between $0.15 and $10.00 or more per $100 of payroll, and the figure for any specific business depends almost entirely on two things: the kind of work employees actually do, and how many claims the company has had.1Texas Department of Insurance. Workers’ Compensation Insurance Guide A desk-only office might pay a few hundred dollars a year on a modest payroll. A roofing crew of the same size can pay tens of thousands. Everything else about pricing is adjustment around those two numbers.
How the Premium Is Calculated
Every policy starts with the same formula. Take your annual payroll, divide it by 100, and multiply by the rate assigned to your job classification code. That produces the manual premium before any further adjustments.
Classification codes are four-digit numbers maintained by the National Council on Compensation Insurance that group employees by the work they do, not by job title.2Ohio Bureau of Workers’ Compensation. NCCI Classification Codes A roofer and an office manager at the same construction company fall under different codes because their injury risk is nothing alike. The rate attached to a roofing code can run several dollars per $100 of payroll; a clerical code can be a few cents. If your workforce spans multiple job types, each group’s payroll is run through its own class code rate and the totals are added.
Payroll for premium purposes includes wages, salaries, bonuses, and commissions. It generally excludes employer-paid health insurance and certain fringe benefits. Misclassifying workers into a cheaper code, whether by mistake or on purpose, is one of the fastest ways to trigger a costly correction at audit time.
The Texas Department of Insurance publishes advisory loss costs for every classification code, and each insurer applies its own multiplier on top to arrive at the actual rate it charges.3Texas Department of Insurance. Texas Workers’ Compensation Rate Guide Two carriers quoting the same business can land at noticeably different numbers, which is why shopping the policy matters.
How the Experience Modifier Changes What You Pay
The class code sets a baseline. Your experience modification rate, usually called the mod or EMR, personalizes it to your company’s actual claims history. A mod of 1.00 means your losses track the industry average. Below 1.00 means fewer or less severe claims than your peers, and your premium drops in proportion. Above 1.00 means the opposite.
The math is direct. A mod of 0.85 means you pay 15% less than the manual premium. A mod of 1.25 means you pay 25% more. On a large payroll, even a few hundredths of a point can mean thousands of dollars a year. NCCI calculates the modifier using a three-year lookback, so safety improvements take time to show up in the price. New businesses, or those below a minimum premium threshold, are typically assigned a 1.00 modifier until they’ve built up enough history for an individualized number.
Rate Ranges by Industry
Rates vary by carrier and by the specific class code, but the broad landscape is predictable:
- Office and clerical work: roughly $0.15 to $0.40 per $100 of payroll. Minimal injury exposure, minimal premium.
- Retail and light commercial: around $1.00 to $2.50 per $100, depending on how much lifting, stocking, and physical customer-facing work is involved.
- Construction, roofing, and trucking: often $5.00 to $10.00 or higher per $100 of payroll. The 2025 advisory loss cost for roofing alone (NCCI Code 5551) was $1.946 per $100 before the carrier’s own multiplier, which can push the final rate well above that figure.4Texas Department of Insurance. Advisory Loss Costs Effective July 1, 2025
Statewide, Texas rates have trended downward over the past decade thanks to improved workplace safety and better medical cost management. Not every employer’s premium has dropped, but the market is more competitive than it was 15 years ago.
Ways to Lower the Number
The biggest lever is the experience modifier, and the only reliable way to move it down is to reduce the frequency and severity of claims. That means training, equipment, and treating workplace injury prevention as a line item worth funding. Over a few years, the savings on premium usually exceed the spend on safety.
Beyond that, some insurers offer discounts for employers who join approved safety group programs or route injured workers through preferred healthcare networks. Combined savings of 10% to 15% or more are common when both are in place, though the exact discount depends on the carrier.
Pay-as-you-go billing, where premium is calculated from each actual payroll run instead of an annual estimate, won’t lower the total but smooths cash flow and shrinks the year-end audit swing. Choosing a higher deductible also lowers the up-front premium, with the trade-off that you absorb more cost per claim.
If private carriers decline you because of claims history or industry risk, Texas Mutual Insurance Company serves as the insurer of last resort, so coverage is available even when the open market says no.5Texas Mutual Insurance Company. The Agent’s Guide to Workers’ Comp Premiums through that channel tend to run higher than competitive private quotes, but coverage is coverage.
Your Quoted Price Isn’t Your Final Price
The initial premium is based on projected payroll. The final bill is based on actual payroll, reconciled through a mandatory audit three to six months after the policy term ends. Higher actual payroll means you owe more. Lower actual payroll means a refund.
The carrier will ask for payroll records broken down by classification code, quarterly tax filings (Federal 941 or state equivalent) covering the full policy period, and records of payments to independent contractors. If a contractor can’t produce proof of their own workers’ comp coverage, the carrier may add those payments to your auditable payroll, which pushes the audit bill up.
Underreporting payroll, whether on purpose or through sloppy recordkeeping, can trigger a retroactive premium adjustment plus penalties, and in some cases cancellation. Clean records throughout the year cost far less than reconstructing them after the fact.
What You Need to Get a Quote
Before an insurer prices a policy, you’ll need your Federal Employer Identification Number, estimated annual payroll broken out by job classification, loss run reports from current and prior carriers covering the past three to five years (most insurers want them updated within 60 to 90 days of the new policy start date), and a description of what employees actually do at each physical work location.
This goes on a standard industry application, the ACORD 130. Accuracy here matters more than speed. Underestimating payroll to get a lower quote just delays the reckoning until audit time, and misclassifying job duties can produce coverage gaps that surface at the worst possible moment.
If You’re Weighing Whether to Carry It at All
Texas is the only state where private employers can opt out of workers’ comp entirely. That makes the cost question partly a cost-benefit question, and the “benefit” side matters.
Non-subscribing employers lose critical legal defenses if an injured worker sues. Under Texas Labor Code Section 406.033, a non-subscriber cannot raise assumption of the risk, contributory negligence, or the negligence of a fellow employee in a workplace injury lawsuit.6State of Texas. Texas Labor Code 406.033 – Common-Law Defenses; Burden of Proof Texas courts have also barred non-subscribers from asserting comparative responsibility. If an employee is hurt on the job and you have no coverage, they can sue with almost no viable defenses on your side and no cap on damages.7Texas Guidebook for Employers. Workers’ Compensation
Subscribing activates the exclusive-remedy provision: in exchange for providing guaranteed medical and income benefits to injured workers, you’re generally shielded from personal injury lawsuits by covered employees over workplace injuries.8Texas Department of Insurance. Workers’ Compensation Income and Medical Benefits That trade-off is the main reason most Texas employers choose to carry it even though the law doesn’t require them to. One narrow situation removes the choice entirely: any private employer bidding a building or construction contract with a Texas government entity must carry workers’ comp for every employee on that project.1Texas Department of Insurance. Workers’ Compensation Insurance Guide