Workers Comp vs Occupational Accident Insurance

MANDATED in 49 states. Required from the first non-owner W-2 employee. Texas is the only opt-in state in the US — every other state requires WC. Tennessee at 5+ employees, Georgia at 3+. Operating without required WC produces severe penalties: state fines, personal liability for employee injuries, denial of state contracts.

PRIVATE / voluntary coverage. Not a regulated mandatory product in any state. Not a legal substitute for required WC. Carriers sell it as supplemental income protection for workers who can't access WC (1099 contractors, Texas opt-outs).

W-2 employees of the covered business. Generally cannot cover 1099 independent contractors (they're not employees). Owner/officer coverage is sometimes excludable depending on state + entity structure.

1099 independent contractors (gig drivers, owner-operator truckers, freelance stylists), Texas opt-outs, gig-economy platform workers, owner-operators who can't buy WC on themselves, booth-renting personal-care workers per F4 Barber + F9 Nail Salons framing.

Statutory. State law dictates exactly what's paid — medical 100%, lost wages typically 66.67% of pre-injury earnings up to state max, disability benefits per state schedule, death benefits per state schedule. No annual benefit cap in most states for medical.

Scheduled per policy. Carrier defines the limits — typically medical capped at $500K-$1M lifetime, lost wages a fixed weekly amount (e.g., $500/week up to 104 weeks), accidental death benefit (e.g., $250K), disability rider optional. Lower benefit ceilings than WC.

Yes (in most states). WC is an 'exclusive remedy' — the injured employee accepts WC benefits and gives up the right to sue the employer for negligence. Major protection for the employer. Some exceptions exist (intentional harm, gross negligence).

No. Occupational Accident does NOT bar the injured worker from suing. A worker who receives Occ Accident benefits can still file a negligence lawsuit against the contracting party. For Texas opt-outs specifically, this is a meaningful risk: choosing Occ Accident means accepting the lawsuit exposure WC would have prevented.

Priced per $100 of payroll, varies dramatically by NCCI class. $0.20/$100 office workers (NCCI 8810) to $20+/$100 roofers (NCCI 5645). Site-wide median per our WC cost page is $54/month / $648/year (Insureon 2024).

Priced per worker, not per payroll. Wide range: $50-$200/month per worker depending on industry, age, benefit limits chosen. Owner-operator truckers commonly pay $80-$150/month for typical packages. Less granular than WC's payroll-based pricing.

Required for: any business with W-2 employees in 49 states. Standard for: restaurants, retail, contracting, services with employees.

Voluntary for: owner-operator truckers, gig drivers (Uber/Lyft/DoorDash where state hasn't mandated TNC injury coverage), Texas opt-outs (the 'non-subscriber' market), booth-renting beauty/barber workers, independent contractors required by 1099-contracting party to carry coverage.

Texas is the only US state where WC is opt-in. Texas employers can decline WC and operate as a 'non-subscriber.' Tradeoffs are significant — accepting employee-injury lawsuit exposure that WC would have eliminated.

Texas non-subscribers commonly buy Occupational Accident to provide some income protection to injured workers — but it does NOT restore the exclusive-remedy lawsuit protection. Many Texas non-subscribers also buy Employer Indemnity (EI) to cover the lawsuit exposure WC would have prevented.