Texas Workers' Comp Insurance for Light Manufacturing & Machine Shops

Texas is the only state where workers' compensation coverage is optional for most private employers. A business that chooses not to carry it is called a non-subscriber, and there is no employee-count threshold that forces coverage for most private employers. The major exception is government building and construction contracts: a governmental entity's construction contract generally must require the contractor, and its subcontractors, to maintain workers' compensation coverage for the duration of the work. See the Texas Department of Insurance, Division of Workers' Compensation's employer guidance.

Common codes for this work include 3632 Machine Shop; 2812 Cabinet Shop (Power Machinery); 3066 Sheet Metal Shop; 3179 Electrical Apparatus Manufacturing; 3681 Electronics / Telecom Device Manufacturing; 4299 Printing; 2501 Clothing Manufacturing; 4511 Analytical Laboratory / Assaying. Texas uses NCCI class codes, so the codes below are the ones carriers typically assign to this work in Texas.

Because coverage itself is optional, Texas doesn't have the same automatic-inclusion rules other states use for owners; a subscribing employer's sole proprietor, partner, LLC member, or corporate officer generally needs to be specifically included on the policy to be covered, similar to an employee election in other states, and coverage details should be confirmed with the carrier. Non-subscribing owners take on the same civil-liability exposure described below for any workplace injury, including their own employees' claims.

Because coverage is optional for most private employers, there's no direct penalty simply for choosing not to subscribe. Instead, a non-subscribing employer loses key common-law defenses (such as contributory negligence, assumption of risk, and the fellow-servant rule) in a lawsuit brought by an injured employee, which significantly increases the employer's exposure to an uncapped jury verdict rather than a scheduled workers' comp benefit. Non-subscribers must give written notice to new hires about their non-covered status, and non-subscribers with five or more non-exempt employees must report qualifying injuries, illnesses, and fatalities to the Division on DWC Form-007 by the seventh day of the following month; failing to file that report or provide required notices can itself bring penalties.

Price is driven by payroll in each class code, the Texas rates filed for those codes, your claims history (experience modification), and underwriting factors such as the specific manufacturing process or product being produced; level of machine guarding and documented lockout/tagout procedures; amount of manual materials handling versus automated processes. We compare carriers so you can see what you qualify for.

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No — classifications are built around the specific product or process, so a machine shop, a cabinet shop, and an electronics manufacturer are each rated differently even though they're all considered light manufacturing.

Office and clerical staff working in a physically separated area away from the production floor may qualify for a standard clerical exception, which is typically rated lower than the manufacturing classification covering shop-floor work.

Payroll may need to be reported under more than one classification when a facility genuinely runs distinct processes — for example, machining and sheet-metal fabrication — with each process rated under its own applicable code.

No, not in most cases. Texas is the only state where coverage is optional for most private employers; a business that opts out is called a non-subscriber.

A non-subscribing employer loses several standard legal defenses and can be sued directly by an injured employee for an uncapped jury award, instead of paying a scheduled workers' comp benefit.