If you're opening a medical practice in Texas, you've probably heard conflicting advice about what insurance you actually need. Some people say malpractice insurance is mandatory, others say it's optional. The truth? Texas has a pretty unique approach that gives you flexibility—but that flexibility comes with real-world consequences you need to understand.
Here's what you need to know about insurance requirements for medical practices in Texas, from professional liability to workers' comp, and why going without coverage might be the riskiest business decision you make.
Medical Malpractice Insurance: Required or Not?
Texas doesn't legally require physicians to carry medical malpractice insurance—a policy that's been in place since the Texas Torts Law reform of 2003. On paper, you could practice medicine without a single dollar of malpractice coverage. But before you celebrate that freedom, understand what it means in practice.
While the state doesn't mandate it, hospitals and medical facilities almost always do. Most hospitals require proof of malpractice insurance before they'll grant you clinical privileges. The standard minimum they're looking for? At least $200,000 per claim with a $600,000 annual aggregate. Some facilities set the bar at $100,000 per occurrence with a $300,000 aggregate, but that's becoming less common as healthcare costs rise.
Professional liability insurance covers you for errors arising from your medical practice. It pays your defense costs and generally covers claims for medical error or negligence—even if those claims turn out to be false or groundless. You'll find two main policy types: occurrence policies provide lifetime coverage for incidents that happen while your insurance is active, regardless of when the claim is filed. Claims-made policies only cover incidents that occurred and were reported while your coverage was active.
Texas does cap noneconomic damages in medical malpractice cases at $250,000 per claimant for individual healthcare providers, with a maximum of $500,000 for wrongful death cases. These caps offer some protection, but they don't eliminate your risk—economic damages like medical bills and lost wages have no cap.
Workers' Compensation: Optional but Strategic
Texas is one of the few states where workers' compensation insurance is optional. If you're running a medical practice with employees—nurses, medical assistants, office staff—you get to decide whether to carry it.
Here's the catch: if you choose not to carry workers' comp, you lose important legal protections. Employers with workers' comp insurance are shielded from most employee lawsuits related to workplace injuries. Without it, an injured employee can sue you directly, and you lose several defenses that would normally be available to you. That medical assistant who slips on a wet floor? Without workers' comp, that's a potential lawsuit with no damage caps.
For medical practices treating workers' compensation patients, you need to know the rules. Doctors aren't required to be approved by the Division of Workers' Compensation to treat injured workers, but you must maintain an active medical license and disclose any financial interest you have in other healthcare providers you refer patients to. This disclosure must happen within 30 days of the initial referral, and failing to comply can result in sanctions, penalties, or forfeiture of reimbursement.
As of January 1, 2025, Texas increased workers' comp reimbursement rates by 3.5%, bringing professional services to 217% of Medicare rates and facility surgeries to 272% of Medicare rates. That makes treating workers' comp patients more financially viable than in many other states.
General Liability and Business Coverage
General liability insurance isn't mandated by Texas law for medical practices, but you'll find it's practically required anyway. Most commercial leases demand proof of general liability coverage before you can sign. Many city contracts require it. And if you're trying to secure business loans or lines of credit, lenders often want to see it.
General liability covers third-party claims for bodily injury, property damage, and personal injury that happen on your premises or as a result of your business operations. This is separate from your malpractice insurance. Think of it this way: malpractice covers your professional services; general liability covers everything else. A patient trips over a loose carpet tile in your waiting room? That's general liability. A patient has an adverse reaction to a treatment you provided? That's malpractice.
Industry experts recommend carrying at least $1 million per occurrence and $2 million aggregate for general liability coverage. That might sound like a lot, but medical malpractice claims can escalate quickly, and you don't want to find yourself underinsured when a claim comes in.
Licensing and Regulatory Requirements
Beyond insurance, Texas has specific licensing and regulatory requirements for medical practices. You'll need your medical license from the Texas Medical Board, which generally takes at least a month to process—so start early. Once you have it, you're required to complete 48 hours of continuing medical education every 24 months, including at least two credits in ethics or professional responsibility.
If you plan to bill insurance companies or government programs like Medicare and Medicaid, you need a National Provider Identifier (NPI). This unique identification number is required for all healthcare providers who submit claims. If your practice has employees, operates as a corporation or partnership, or withholds taxes on income for non-resident aliens, you'll also need an Employer Identification Number (EIN) from the IRS.
Changes are coming in 2026 related to physician licensing. The Texas Medical Board must adopt new rules by January 1, 2026, to implement pathways for foreign-trained physicians and medical school graduates. This could affect how new physicians enter the Texas healthcare market and what insurance requirements apply to physician graduates working under limited licenses.
How to Get Started with the Right Coverage
Setting up insurance for your Texas medical practice doesn't have to be overwhelming. Start by getting quotes from multiple insurers for medical malpractice coverage. The Texas Department of Insurance recognizes four types of organizations that can offer medical malpractice insurance: licensed insurance companies, higher education medical professional liability funds, surplus lines insurers, and risk purchasing or risk retention groups.
When comparing policies, look beyond the premium price. Check whether it's an occurrence or claims-made policy, understand what's covered and what's excluded, and verify the financial strength of the insurance company. You want an insurer that will still be around when you need to file a claim years from now.
Consider bundling your coverages when possible. Many insurers offer package policies that combine professional liability, general liability, and property coverage at a lower total cost than buying each separately. And don't skip the workers' comp conversation with your insurance agent—even though it's optional in Texas, the protection it provides is often worth the investment.
The bottom line? While Texas gives you flexibility on insurance requirements, operating a medical practice without adequate coverage is playing financial Russian roulette. Get quotes, understand your options, and build a comprehensive insurance program that protects both your practice and your personal assets. Your future self will thank you.
