Want a get-out-of-jail-free card?

Remember playing Monopoly when you were young (or maybe you still play)? One of the best cards you could get off of the board was the get out of jail free card. Save it until you get sent to jail and viola – all you got was a free ride across the board with no penalties.


Now apply that concept to your business. Subscriber Workers’ Compensation Insurance gives you something that is as close to get-out-of-jail-free as you can get – the protection of Exclusive Remedy.


Texas is a unique state in more ways than one. Texas is the only state where you have the ability to “opt out” of the Subscriber Workers’ Compensation system. Pretty cool when you think about the business options this gives you. However, when you opt out, you give up the protection of Exclusive Remedy. Exclusive Remedy means that the WC subscriber system is the exclusive system that the employee has in order to be taken care of in the event of a workplace accident. Medical care for their injury and recovery of lost or future wages is what is covered. That means they cannot sue you for the injury (well, not exactly true – there are very limited circumstances that are still open for litigation, but that is for another discussion).


On the flip-side, an Occupational Accident policy may be more cost effective up front. However, this type of policy doesn’t provide the rights of exclusive remedy. Meaning that an injured employee can sue you for their injury and you give up your right to common defense. Plus, most OccAcc policies have limits that can be quickly reached and surpassed in the event of a catastrophic injury or multiple injuries over the course of the policy, meaning that you will have to personally foot the bill for the rest. If the employer doesn’t pay those expenses OR doesn’t do it in a way that the employee feels is in their best interest, the employee may sue for the difference plus attorney fees.


Now here comes the tricky part – which type of insurance do you have? Many insurance agents sell an OccAcc policy that they refer to as “Workers’ Comp” or they imply that they have a cheaper insurance that does the same as WC. However, they often don’t tell you the differences and benefits of WC over an OccAcc policy. I am a firm believer of not purely taking anyone at their word – including me. Check with your attorney or do a simple internet search regarding the differences in Texas between subscriber and non-subscriber workers’ compensation insurance. I know you will find some information that would affect your decision making process regarding work injury insurance.


The final option is one that NO ONE recommends – going bare. If you decide to operate with NO workers’ comp coverage at all (your General Liability insurance will not cover employees injuries), then you risk everything. An injured employee can take your business, your home, and your children’s college fund to cover the cost of injury and lost wages. Plus, most people who go bare don’t realize that there is a requirement from the Texas Department of Insurance to report to them – annually – of your decision to opt-out of the system. Additionally you are required to report to the TDI, any work related injuries.