Running a physical therapy practice in Texas comes with unique insurance requirements that go beyond what most healthcare providers face. Whether you're opening your first clinic or expanding an existing practice, understanding these mandates can save you from costly mistakes and legal headaches down the road.
Texas stands out because it's one of the few states where workers' compensation is optional—but that doesn't mean you should skip it. Plus, there's a specific professional liability requirement that kicked in back in 2019 for PTs treating patients without referrals. Let's break down exactly what coverage you need, what's optional but smart to have, and what it'll actually cost you.
Texas Licensing Requirements for Physical Therapists
Before we dive into insurance, you need to be properly licensed. The Executive Council of Physical Therapy and Occupational Therapy Examiners (ECPTOTE) oversees all PT licensing in Texas. As of March 2025, they transitioned to a new licensing system, so if you're applying now, you'll go through their updated process.
To practice as a physical therapist in Texas, you must graduate from a Doctor of Physical Therapy (DPT) program accredited by the Commission on Accreditation in Physical Therapy Education (CAPTE), pass the National Physical Therapy Examination administered by the Federation of State Boards of Physical Therapy (FSBPT), and complete a criminal background check via fingerprinting. Your license renews every two years, and you'll need to complete 30 continuing competence units during each renewal period.
Mandatory Professional Liability Insurance
Here's where Texas gets specific. Since September 1, 2019, if you're treating patients without a physician referral, you must carry professional liability insurance (also called malpractice insurance). The Texas PT Board set minimum coverage levels at $100,000 per claim and $300,000 aggregate per year.
This type of coverage protects you when a patient claims your treatment caused harm or didn't meet professional standards. It covers attorney fees, investigation costs, defense against licensing board complaints, HIPAA violation investigations, and settlement or judgment payments. Even if you always work with physician referrals, most PTs carry this coverage anyway—lawsuits can come from anywhere, and defense costs alone can run into six figures.
The good news is that professional liability insurance for physical therapists is relatively affordable. Some providers offer coverage starting as low as $89 per year for individual practitioners, though your actual cost depends on your experience level, specialty areas, past claims history, and whether you own a practice or work as an employee.
General Liability Insurance: Protecting Your Business
General liability insurance is different from professional liability, and you need both. While professional liability covers treatment errors, general liability protects against physical accidents and property damage. Think of it this way: if a patient slips on your wet lobby floor and breaks an ankle, that's a general liability claim. If you misdiagnose a condition or a treatment plan causes injury, that's professional liability.
In Texas, general liability insurance for physical therapy practices averages around $42 per month. This coverage handles bodily injury claims from third parties, property damage you or your staff cause to others' property, advertising injury claims, and medical payments for minor injuries regardless of fault.
Many landlords and commercial lease agreements require proof of general liability insurance before you can occupy a space. Some contracts with hospitals or healthcare networks also mandate minimum coverage levels, often $1 million per occurrence and $2 million aggregate.
Workers' Compensation: Optional But Important
Texas is unique—it's one of the only states where workers' compensation insurance is optional for most private employers. You're not legally required to carry it, but if you choose to go without coverage, you must notify the Texas Department of Insurance and post notices informing your employees that you don't carry workers' comp.
Here's the catch: without workers' comp, you lose crucial legal protections. Employees can sue you directly for workplace injuries, and you can't use common law defenses like contributory negligence or assumption of risk. One serious injury could bankrupt your practice. Workers' comp for physical therapy practices typically runs about $7 per month per employee according to 2025 data, making it one of the most affordable protections you can buy.
If you hire even one physical therapy assistant, receptionist, or billing specialist, strongly consider workers' comp coverage. It covers medical expenses for work-related injuries or illnesses, partial wage replacement while employees recover, rehabilitation costs, and death benefits for employees' families in fatal cases.
Business Owner's Policy: The Smart Bundle
A Business Owner's Policy (BOP) bundles general liability with commercial property insurance, usually at a discount compared to buying them separately. In Texas, the average BOP costs around $877 per year for physical therapy practices, though this varies significantly based on your location, equipment value, building size, and claims history.
Commercial property coverage within a BOP protects your physical therapy equipment—treatment tables, ultrasound machines, electrical stimulation devices, exercise equipment, computers, and office furniture. If a fire, theft, or natural disaster damages your clinic, commercial property insurance covers replacement costs. Given that outfitting a physical therapy clinic can easily cost $50,000 to $150,000, this protection is essential.
According to 2025 industry data, Nationwide offers some of the most competitive BOP rates for physical therapy practices, with annual costs as low as $359 for bundled coverage. Shopping around makes a real difference—quotes can vary by hundreds of dollars for identical coverage.
Additional Coverage to Consider
Beyond the core policies, several other coverages make sense for physical therapy practices. Cyber liability insurance protects against data breaches—critical when you're storing patient health records electronically and subject to HIPAA regulations. A single breach notification can cost thousands even if no records are compromised.
Business interruption insurance covers lost income if you have to close temporarily due to a covered event like fire or storm damage. Employment practices liability insurance (EPLI) protects against claims of wrongful termination, discrimination, or harassment. Commercial auto insurance is necessary if you own vehicles for your practice or if employees use their personal vehicles for work-related activities like home health visits.
How to Get Started
Start by ensuring you meet Texas licensing requirements through ECPTOTE. Once licensed, shop for professional liability insurance first—it's mandatory if you'll treat patients without referrals and relatively inexpensive. Get quotes from carriers like HPSO (the APTA-endorsed provider), CM&F Group, and other healthcare-focused insurers.
Next, bundle general liability and commercial property coverage through a BOP to save money. Compare quotes from at least three carriers—Nationwide, Progressive, and regional Texas insurers often offer competitive rates. Make sure to accurately report your equipment values and square footage to avoid coverage gaps.
Finally, even though workers' compensation is optional in Texas, seriously consider adding it before you hire your first employee. The modest monthly cost provides invaluable protection against potentially devastating lawsuits. Work with an insurance broker who specializes in healthcare practices—they'll know which carriers offer the best rates for physical therapy businesses and can bundle policies for maximum savings.
