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Illinois workers' compensation insurance: Your guide to requirements and getting a policy
If you’re an Illinois employer looking to protect both your business and your team, you’re in the right place. At Beyond, we provide the essential information you need to understand how workers’ compensation works and how to stay compliant.
Sometimes at work, unexpected or unintentional incidents can lead to an employee getting injured, sick, or hurt while performing their job duties. When this happens, and the employee is unable to work, it often means a loss of income. That’s where workers’ compensation can make a critical difference.
Workers’ compensation ensures that injured or ill employees receive reasonable and necessary medical treatment and partial income replacement. It helps cover medical expenses and lost wages. In most states, employers are required by law to provide this type of insurance.
Workers’ compensation also protects employers. In most jurisdictions, employees covered by workers’ comp generally cannot sue their employer for work-related injuries or illnesses. Some policies may also include fraud protection and legal coverage.
Under Illinois law, all businesses with full-time or part-time employees must carry workers’ compensation insurance. This includes family members unless they are corporate officers. Some owners — including sole proprietors, partners, corporate officers, and members of LLCs — may elect to exclude themselves.
Employees must be covered from the moment they are hired, according to the Illinois Workers’ Compensation Commission (IWCC).
If an employee suffers a job-related injury or occupational illness in Illinois, workers’ comp may cover:
Partial income replacement
Medical expenses
Rehabilitation costs
Permanent disability benefits
Employees should notify their employer as soon as possible. Illinois law requires that all work-related incidents be reported within 45 days of the event.
Illinois employers have two main options for obtaining coverage:
Buy a policy from a private insurance carrier — Over 90% of Illinois employers choose this route, according to the IWCC.
Apply for self-insurance — Employers must meet strict financial and administrative criteria to be approved.
Employers who fail to provide workers’ compensation insurance face serious penalties under Illinois law:
$500 per day of noncompliance (minimum total penalty: $10,000)
Class A misdemeanor: If due to neglect, each day of noncompliance is punishable by up to 12 months in jail and a $2,500 fine
Class 4 felony: If failure is found to be knowing and willful, it could result in up to 3 years in prison and fines up to $25,000
The IWCC may also issue a work stop order to businesses that knowingly operate without coverage
Additionally, employers cannot deduct the cost of workers’ compensation premiums or benefits from employee wages.
Employers must post a workers’ compensation notice in a prominent location at each worksite. The official Illinois notice can be downloaded here: ICPN Workplace Notice (rev. 10/11)
Having a workers’ compensation policy isn’t just a legal obligation in Illinois — it’s also a valuable protection for your business and your team. When employees are covered, they can focus on recovery without financial stress. And employers can operate with the confidence that they’re protected from legal and financial risks.
If you have questions or need help setting up your workers’ comp policy, the team at Beyond is here to support you.
