The short version
- Occupational accident is an accident policy that pays scheduled benefits, typically medical, disability and death benefits, when a covered person is hurt on the job. It is not workers' compensation.
- Texas Labor Code 406.121 defines an owner-operator as an independent contractor, and 406.122(c) says an owner-operator with a qualifying written agreement is not the motor carrier's employee for workers' comp purposes. That is why leased owner-operators often carry occupational accident instead.
- For Texas intrastate carriers whose primary business is for-hire transportation between municipalities, Transportation Code 643.106 requires workers' comp or approved accidental insurance with minimums of $300,000 medical for at least 104 weeks, $100,000 AD&D, 70 percent of pre-injury income for at least 104 weeks, and a $500 maximum weekly benefit.
- Occupational accident does not stop a lawsuit. If an injured driver claims to be an employee, the carrier needs to know what pays for that suit.
What occupational accident insurance is
IRMI describes occupational accident insurance as coverage purchased by firms that have opted out of the Texas workers' compensation system, so they can offer workers benefits similar to those workers' compensation would provide. In trucking it is used in two main ways:
- For leased owner-operators, who are independent contractors and usually not covered by the motor carrier's workers' compensation.
- For nonsubscribing Texas employers, as part of an injury benefit program for employees.
An occupational accident policy is a contract with its own schedule of benefits. Common benefit types include accident medical expenses, temporary and continuous total disability payments, accidental death and dismemberment, and survivor benefits, each with its own limit, waiting period and maximum duration. Unlike workers' compensation, there is no statutory benefit level: you get what the policy schedule says.
That difference matters. A Texas workers' comp policy pays benefits set by the Labor Code without regard to fault (Labor Code 406.031). An occupational accident policy pays what it promises and stops at its limits.
Leased owner-operator: who covers what
The Texas rules that shape owner-operator coverage
Texas law treats owner-operators differently from other contractors.
- Labor Code 406.121 defines an owner-operator as a person who provides transportation services under contract for a motor carrier, and states that an owner-operator is an independent contractor. It also says the term "general contractor" does not include a motor carrier that provides service through an owner-operator.
- Labor Code 406.122(c) says an owner-operator and the owner-operator's employees are not employees of the motor carrier for workers' comp purposes if the owner-operator has a written agreement with the carrier evidencing that the owner-operator assumes the responsibilities of an employer for the work.
- Labor Code 406.123(c) lets a motor carrier and an owner-operator agree in writing that the carrier will provide workers' comp coverage to the owner-operator and the owner-operator's employees, and 406.123(d) lets the carrier deduct the actual premium from what it owes the owner-operator.
So a Texas carrier has a choice: rely on the independent contractor structure and require owner-operators to carry occupational accident, or extend workers' comp to them by written agreement. Either way, the lease should say which. Federal leasing rules already require the lease to say who provides insurance beyond the carrier's federally required coverage and what it charges back (49 CFR 376.12(j)). Have an attorney draft or review that language. See who insures a leased owner-operator.
| Feature | Occupational accident | Texas workers’ compensation |
|---|---|---|
| Who it is for | Owner-operators, nonsubscriber employees | Employees of a subscribing employer |
| Benefit levels | Set by the policy schedule | Set by the Texas Labor Code |
| Fault | Accident policy terms | Paid without regard to fault (406.031) |
| Lawsuit protection for the employer | None by itself | Employees covered by the system generally give up common-law suits (406.034) |
| Employer’s liability coverage | Not included | Usually included with the policy |
| Texas intrastate 643.106 option | Allowed if department-approved and at statutory minimums | Allowed |
The Texas intrastate accidental insurance requirement
Most people assume Texas never requires injury coverage for trucking. That is not quite right.
Transportation Code 643.106 says a motor carrier required to register with TxDMV whose primary business is transportation for compensation or hire between two or more municipalities shall protect its employees by obtaining either workers' compensation insurance or accidental insurance coverage approved by the department, from an insurer authorized to write accidental policies in Texas or an eligible surplus lines insurer. TxDMV's rule (43 TAC 218.16(c)) and the statute set the accidental insurance minimums:
- $300,000 for medical expenses for at least 104 weeks
- $100,000 for accidental death and dismemberment
- 70 percent of the employee's pre-injury income for at least 104 weeks for loss of income
- $500 for the maximum weekly benefit
If that section applies to your operation, an occupational accident policy below those amounts does not satisfy it. Whether your business fits the "primary business" language is a legal question; ask a Texas transportation attorney or TxDMV. See Texas intrastate truck insurance requirements.
Contingent liability and the lawsuit problem
Occupational accident pays benefits. It does not defend the motor carrier.
If an injured owner-operator, or the family of one killed in a wreck, argues that the driver was really the carrier's employee, the carrier may face a negligence suit. A Texas nonsubscriber facing that suit loses common-law defenses such as contributory negligence under Labor Code 406.033. Neither the carrier's auto liability nor its general liability policy is designed to pay injury claims by its own workers. Some occupational accident programs are paired with a contingent liability coverage for the motor carrier for exactly this situation. Terms vary widely; read them.
Questions to answer before you rely on an occupational accident program:
- Does the policy meet any limits the lease or 643.106 requires?
- Who is the named insured: the carrier, the owner-operator, or a trust or association?
- Is there contingent liability for the carrier, and what does it exclude?
- Are the owner-operator's own drivers covered, or only the owner-operator?
- What happens to coverage when the lease ends mid-month?
See occupational accident vs workers' comp and do Texas trucking companies need workers' comp.
Check this first
Ask for the occupational accident policy schedule, not just a certificate. Compare its medical, disability and death benefit limits to Transportation Code 643.106 and to what your lease promises owner-operators.
Common questions
Is occupational accident insurance the same as workers' comp?
No. Occupational accident pays benefits set by the policy schedule. Texas workers' comp pays benefits set by the Labor Code and generally replaces an employee's common-law right to sue the employer. Occupational accident does not protect the employer from suits.
Are owner-operators employees under Texas workers' comp law?
Texas Labor Code 406.121 defines an owner-operator as an independent contractor, and 406.122(c) says an owner-operator with a qualifying written agreement is not the carrier's employee for workers' comp purposes. The facts and the agreement still matter.
Can a Texas motor carrier cover owner-operators under its workers' comp?
Yes. Labor Code 406.123(c) allows a written agreement under which the carrier provides workers' comp to the owner-operator and the owner-operator's employees, and the carrier may deduct the actual premium from amounts owed.
Does Texas require occupational accident for intrastate carriers?
Transportation Code 643.106 requires TxDMV-registered carriers whose primary business is for-hire transportation between municipalities to carry workers' comp or department-approved accidental insurance with minimum benefits, including $300,000 medical and $100,000 AD&D.
Who pays for occupational accident coverage?
Often the owner-operator, through a charge-back from the motor carrier. Federal leasing rules require the lease to state who provides the coverage and the amount of any charge-back.
Sources
- IRMI: Occupational accident insurance. Coverage bought by firms that opted out of Texas workers comp to provide comparable benefits.
- Texas Labor Code chapter 406. Sections 406.031, 406.033, 406.121, 406.122(c), 406.123(c)-(d): owner-operator status and carrier-provided coverage.
- Texas Transportation Code chapter 643. Section 643.106: workers comp or approved accidental insurance with minimum benefits for certain intrastate carriers.
- 43 Tex. Admin. Code 218.16. TxDMV rule restating the accidental insurance minimums in subsection (c).
- 49 CFR 376.12: Lease requirements. Lease must state who provides other insurance and any charge-back to the owner-operator.
This page explains insurance, not law. Have your attorney review indemnity and contract language; our job is making the insurance match it.
Keep reading
Questions
What is the difference between occupational accident and workers comp?
Coverage
Workers’ comp for Texas trucking companies: elective, but not optional in practice
Coverage
Non-trucking liability: the owner-operator policy for when you are not under dispatch
Contracts and deadlines
We are leasing owner-operators onto our authority. Who insures what?
Questions
Who insures a leased owner-operator?