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Illinois Workers' Compensation Insurance

Illinois requires that nearly all employers must have workers’ compensation insurance. Businesses with at least one employee must have work comp coverage.

What’s more, compliance is strictly enforced: Negligence is a misdemeanor, while knowing failure to provide workers’ compensation insurance coverage for employees is considered a felony.

Get your small business covered today, or read on for more details on the Illinois workers’ compensation system.

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Is Workers' Compensation Insurance in Illinois Required?

You are required to carry workers' compensation insurance in Illinois if you have any employees. This includes full-time, part-time and most family members working for the business.

There are few exceptions to this rule; for example:

  • Sole proprietors, business partners, corporate officers, members of a limited liability company: Not typically required to be covered, but they may choose to include themselves to be eligible for benefits. If excluding themselves, they must submit this in writing to the insurance carrier.
  • Hazardous industries: Anyone working in construction, trucking or other “extra hazardous” industries must have coverage, even if they are a sole proprietor, corporate officer or member of an LLC.
  • Independent contractors: The state, not the employer, ultimately determines whether a worker was acting as an employee or an independent contractor. (See the general guidelines here.) Trucking companies should be particularly cautious; a recent Illinois Supreme Court ruling found that contractually referring to a trucker as an independent contractor does not remove the trucking company's obligation to provide work comp for drivers.

Speak with an insurance rep familiar with the Illinois workers’ comp system to make sure your business is compliant with state law.

How to Buy Small Business Workers’ Compensation Insurance

Illinois has a private market. You have the option to purchase workers’ compensation insurance, or some larger employers may obtain permission from the commission to self-insure. 

Illinois workers’ compensation rates are recommended by the National Council on Compensation Insurance (NCCI), which most states use as their rating bureau. NCCI collects data on workplace injuries and advises rates based on class code, or industry classification.

Illinois does not have a state-funded insurance option. If your business is having trouble finding coverage, contact NCCI and ask for the Illinois assigned risk plan. NCCI also administers the state’s assigned risk pool, and will place you with a carrier.

Illinois Workers' Compensation Rates 2019

Illinois work comp costs are among the highest in the nation, though 2011 reforms have been credited with reigning in costs.

Workers’ compensation insurance is calculated based on your work comp class code, payroll and past claims. For every $100,000 in payroll, the average policy can range from a few hundred dollars to a few thousand dollars annually.

Physically demanding or high-risk jobs have higher premiums than office jobs, but costs can also vary widely by state. This is because workers’ comp covers legal costs as well as medical bills and missed wages, which raises rates in markets with higher wages. How to Estimate Your Workers’ Compensation Costs.

According to the Illinois Workers’ Compensation Commission, employers can expect assigned risk pool premiums to cost about 50% more than the open market. Recently, the state legislature has been debating the creation of the Illinois Employers Mutual Insurance Company. This state-financed insurer would give employers a state fund option to compete with private insurance carriers, argue supporters. Critics believe inserting government into the marketplace will do more harm than good to work comp premiums.

Illinois Workers' Compensation Laws 

Illinois law protects employees both working in, or employed within the state. This includes:

  • Employees who sustain a work-related injury within state lines.
  • Employees whose work is primarily located in Illinois.
  • Employees whose contract was made in Illinois.

Remember: Work comp covers wage replacement and medical bills for employees injured on the job. To protect against other injuries at your place of business, you may need general liability insurance. Learn more about general liability >>

Illinois Work Comp Resources

Editor's note: This page was updated in 2019 for accuracy and comprehensiveness.

Here's What You Need to Get Started

To buy workers compensation insurance, you need to request a quote from a licensed insurance agent and provide some details about your business.

Here’s what to have in front of you:

  • Number of employees in each class code.
  • Total payroll for all employees. You may be able to exclude yourself if you don't wish to be covered under the policy. 
  • Federal ID Number. If you are a sole proprietor, you can use your Social Security Number.
  • Copy of your workers comp insurance policy, if you've had coverage or claims in the past few years. If you know your company's experience mod, please have your experience mod rating sheet or policy in front of you. Otherwise, you will be assigned a default rating of 1.0.

The information on this page has been interpreted and summarized for your convenience. Please consult your state's governing authority for the most current and complete legislation.