Four things lower a Texas workers comp bill: more quotes, correct job categories, payroll records that survive the audit, and subcontractor paperwork. None of them cut your coverage. Texas does not make private employers carry workers comp at all; once you do carry it, these are the levers that lower the bill. Who this is for: Texas contractors who chose to carry workers comp, or who must carry it for a public project or a general contractor, and want to pay less for it.
The short version
- Most Texas insurers start from the same published base numbers and mark them up their own way, and some file their own instead, so two quotes for the same crew can differ sharply. Shop at least three.
- Put office staff in the office category and keep time records that prove it. One misplaced clerk can cost thousands.
- Get written agreements from your subcontractors on the state forms, or their payroll may land on your audit.
- An owner who stays in the office can usually be taken off the policy with a one page change. An owner who works in the field usually should not be.
- Texas does not require private employers to carry workers comp at all. Most contractors carry it because general contractors and public jobs require it.
Why do Texas workers comp quotes differ so much?
Most Texas insurers start from the same published base numbers and mark them up their own way, and some file their own numbers instead. That is why two quotes for the same crew can be thousands apart. The insurer then applies your experience modification (a multiplier on your price based on your claims history) and any credit for your safety record.
Texas Mutual Insurance Company, the state-created carrier, must insure any employer that pays the premium, so nobody is left without an option. It is still one insurer among many, and not always the cheapest. If you have only ever had one quote, you have not shopped. See what workers comp costs in Texas.
Where does the money actually go?
A national illustrative example for a framing contractor, not Texas rates. Your trade, payroll, claims history, and insurer set your real numbers.
| Lever | Before | After | Illustrative yearly saving |
|---|---|---|---|
| Shop three insurers instead of renewing | $54,000 | $47,500 | $6,500 |
| Move an office manager to the office category | Rated at the framing rate | Rated at the office rate | Most of that person's premium |
| Exclude an owner who works only in the office | Charged as payroll: a set figure for a sole proprietor or partner, actual pay within a minimum and a maximum for a corporate officer. Ask your insurer which applies | Excluded by endorsement | $400 to $2,000 |
| Sub agreements on file before the audit | Uninsured sub work charged to you at audit | Nothing added | $8,100 |
| Experience modification drops to 1.00 after two clean years | 15 percent surcharge | None | $6,000 to $7,000 |
How do I keep office staff out of the field rate?
The clerical category costs a small fraction of any construction category. To qualify, the work must be office work done in a space separated from the shop, yard, or job site by a wall, floor, partition, or counter. An office worker who also runs materials to a job or supervises a crew loses the category for all of their payroll: there is no partial clerical rate. For policies starting on or after July 1, 2026 Texas also has a work-from-home clerical category, priced at the office category to begin with. Full detail at should office staff cost less to insure than field employees in Texas.
How do I keep subcontractor payroll off my audit?
At the premium audit, the insurer's year-end check of your real payroll, the auditor looks at every payment you made to a sub. If the sub has no workers comp and no agreement on file, the auditor charges you for that work, rated at the sub's own work classification rather than your trade rate. If you cannot show what the sub paid its crew, the auditor uses a percentage of the contract price, and a contract that includes materials should not be charged as if it were all labor. Splitting the invoices between labor and materials is the cheapest argument you can make at an audit.
Three state forms settle the question in advance. Each is filed with your insurance company, not with the state, and Form-081 and Form-085 go in within 10 days of signing. Ask your broker about Form-083.
| Form | What it does | Effect on your premium |
|---|---|---|
| DWC Form-085 | You and the sub agree in writing that the sub is an independent business and its workers are not your employees for workers comp | The sub's payroll stays off your policy |
| DWC Form-083 | The construction joint agreement. Option 1 declares the sub independent; Option 2 says you will buy the coverage | Option 1 keeps payroll off. Option 2 adds it, and you may deduct the cost from the sub's price |
| DWC Form-081 | You buy workers comp for the sub and deduct the payroll-based premium from the subcontract price (Labor Code Section 406.123) | Adds the sub's payroll, but you recover the cost |
The cheapest path is usually to hire subs who carry their own workers comp and collect their certificates before they start. Texas does not require private subs to carry it, so ask. More at workers comp and 1099 contractors in Texas.
What else lowers the bill?
- Owner exclusion. Once your business carries a policy, an owner is covered unless the policy is endorsed to exclude them. Excluding an owner who stays in the office is usually sensible; excluding one who works in the field is a bet. See can I exclude myself from workers comp in Texas.
- Claims handling. Report injuries the same day and bring people back to light duty early. Your experience modification follows your losses for three years.
- Dividends and pay as you go. Some Texas insurers return part of the premium after a good year, and reporting payroll each pay period avoids a large audit bill.
What this looks like in real life
Illustrative example. It is typical of what we see and is not a promise of how any specific situation would be handled.
The setup: A framing contractor in Dallas renews at about $54,000, illustrative. The office manager is rated as a framer, an owner who never leaves the office is included on the policy, and payments to two uninsured subs were added at last year's audit.
What went wrong: The owner assumes Texas workers comp simply costs this much. The renewal arrives with no other quotes, and the audit bill is treated as a cost of doing business.
What it cost: Shopping three insurers, moving the office manager to the office category, excluding the office owner, and putting signed DWC Form-085 agreements in every sub file cut the next year's cost to roughly $35,000. Illustrative figures, but the $19,000 difference is typical of what a first real review finds.
The fix: Ask for the payroll breakdown by job category on every quote, fix the categories before the policy starts, and sign the sub agreements before the subs start.
Frequently asked questions
Q: How can I reduce my workers comp costs in Texas?
Shop at least three insurers, get each employee in the correct job category, keep time records that split office and field work, sign the state sub agreements before the job, and take office-only owners off the policy.
Q: Did Texas workers comp rates go down?
They fell an average of 11.5 percent on July 1, 2025 and a further 3.8 percent on July 1, 2026, per the Texas Department of Insurance. Each insurer applies its own factor on top, so your own change depends on who writes you.
Q: Is Texas Mutual the cheapest option?
Not always. Texas Mutual must take any employer that pays the premium and writes a large share of the state, but many other insurers compete for contractors. Compare quotes built on the same payroll and job categories.
Q: Can I drop workers comp altogether to save money in Texas?
Legally most private employers can, by becoming a non-subscriber and filing DWC Form-005. But a non-subscriber gives up its main defenses if an employee sues, cannot work on public building projects, and will be turned away by most general contractors.
Q: Why did my audit add payroll for my subcontractors?
Because the auditor found payments to subs with no proof of their own workers comp and no signed agreement on file. Collect certificates from insured subs, and sign DWC Form-085 or Form-083 with independent ones before they start.
Q: My subcontractor says he has coverage but will not send a certificate. What do I do?
Treat him as uninsured until the certificate arrives. Without it the auditor has nothing to look at, and his crew's pay can be charged to you. Ask his insurance agent directly, because a certificate takes minutes to issue.
How Morrow helps
Morrow is a licensed independent commercial insurance brokerage that works with contractors and trades every day. Finding where a Texas contractor's workers comp bill is too high, then fixing the categories, the sub paperwork, and the insurer, is a review we do at no charge.
- Free contract review. Send us the contract or bid documents and we mark up the insurance section in plain English, whether or not you buy anything from us.
- Free, instant certificates. Clients issue their own certificates of insurance online in about a minute, any hour, any day, at no charge.
- Markets you cannot reach online. One application, shopped across many insurance companies for general liability, workers comp, auto, umbrella, and pollution coverage.
One more thing. This article is general information and is not legal advice or a statement of coverage. Your contract and your policy wording control in every case. Requirements vary by customer, by state, and by insurance company, so have a licensed advisor review your own contract and your own policy before relying on any of it.
Last updated: Reviewed by the Morrow commercial lines team. Last updated September 2026.