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Workers' Compensation Insurance: It's the LAW.

Illinois law requires employers to provide workers' compensation insurance for almost everyone who is hired, injured, or whose employment is localized in Illinois. Sole proprietors, business partners, corporate officers, and members of limited liability companies may exempt themselves. Overall, it is estimated that 91% of Illinois employees are covered under the Act.

An employer that knowingly and willfully fails to obtain insurance may be fined up to $500 for every day of noncompliance, with a minimum fine of $10,000. Corporate officers can be held personally liable if the company fails to pay the penalty. Since 2006, the Commission has collected over $7 million in fines. This provides workers the proper legal protection and other employers a more fair competitive arena. Fines are deposited into the Injured Workers' Benefit Fund.


Disclaimer: This information is not intended to be a full exposition of the insurance provisions of the Workers’ Compensation Act. For more information, we suggest you contact an attorney knowledgeable about workers’ compensation.

Questions for employers

How many employees does an employer have to have to come under the Act?

If you have one employee, even a part-time employee, you must obtain workers' compensation insurance. There are rare exceptions; see Section 3 of the Act or consult an attorney.

Do employees who are family members have to be insured?

Yes, unless


  1. they are corporate officers; or
  2. they work for an agricultural enterprise that employs less than 400 working days of labor per quarter during the preceding calendar year, exclusive of working hours of the employer's spouse and other members of his or her immediate family residing with him or her.

Statute: Sections 3(17)(b) and 3(19)

Is there a waiting period for workers’ compensation coverage?

No. From the moment they are hired, employees are covered by the Workers' Compensation Act and must be insured.

What are the penalties if an employer fails to carry workers' comp insurance?

An employer that knowingly and willfully fails to obtain insurance may be fined up to $500 for every day of noncompliance, with a minimum fine of $10,000. Corporate officers can be held personally liable if the company fails to pay the penalty. Since 2006, the Commission has collected over $8 million in fines.


In addition, corporate officers who are found to have negligently failed to obtain insurance are guilty of a Class A misdemeanor; if they are found to have knowingly failed to obtain insurance, they are guilty of a Class 4 felony.


An employer that knowingly fails to obtain insurance loses its protections under the Workers' Compensation Act. An employee who is injured during the time the employer was uninsured may sue the employer in civil court, where benefits are unlimited. In addition, during the trial the burden will be upon the employer to prove it was not negligent.


The Commission may issue a work-stop order on an employer that has been found to have knowingly failed to provide insurance. The employer must then stop all business operations until it provides proof of insurance.


Statute: Section 4(d)

I am a sole proprietor/business partner/corporate officer/member of a limited liability company. Do I have to buy w.c. insurance?

The short answer is no, but the full answer is a bit longer. In summary, sole proprietors * and business partners may elect to come under the Act or they may choose not to.


There is a twist, though, in Section 3 of the Act. It provides that employees who engage in extra hazardous * occupations must be covered under the law--but then subsections 3(17) and 3(20) allow sole proprietors, corporate officers, business partners, and members of limited liability companies to opt out.


In summary, if you are a sole proprietor, business partner, corporate officer, or member of a limited liability company, and...


... you want to come under the Act, you must purchase insurance for yourself to be covered for a work-related injury or illness.


... you don't want to be covered, and you have an insurance policy for other employees, you must notify your carrier in writing of your intention to opt out, following the instructions in Section 3(17)(b).


* If your company is in the construction business, trucking business operating at a construction site, or other extra hazardous occupations, you should be aware that new law (see 820 ILCS 185, Employee Classification Act) requires that, in almost all instances, you must obtain insurance.


Also, a recent decision by the Illinois Supreme Court, Roberson v. Industrial Commission, states that referring to a trucker as an independent contractor, even in a written lease agreement, does not remove the trucking company's obligation to provide workers’ compensation insurance for those drivers.


Contact the Insurance Compliance Unit, an attorney, or a C.P.A. for more information concerning these businesses.


The Commission does not have an opt-out form and does not require individuals to use an opt-out form.

I am a new employer. How do I obtain w.c. insurance?

Employers may either buy insurance or obtain permission to self-insure. Roughly 90% of employers buy insurance.


In Illinois, w.c. insurance is sold in the private sector. You may contact a licensed insurance agent, perhaps one who specializes in business owners' insurance. If you cannot find an insurer to write you a policy, you may sign up or have your agent enroll you in the market of last resort. This residual market--in which premiums cost about 50% more than the open market--is administered by the National Council of Compensation Insurance. (800-622-2413 Ask for the Illinois assigned risk plan).

What companies write workers' compensation insurance?

Each year, the Illinois Department of Insurance issues a "Market Share Report," listing all the workers' compensation carriers in Illinois. Illinois has more companies writing workers' compensation insurance than any other state.

What can I do if I have a question about my workers' compensation insurance rate?

The Illinois Department of Insurance may be able to assist with problems regarding premiums with an insurance company. For insurance rate questions, contact Keith Fanning at IDOI (; 217-782-1786). Click here for more IDOI contact information.


The National Council on Compensation Insurance, a private organization, issues advisory insurance rates. Since 1983, Illinois has allowed insurance companies to set their own rates.

How do I file a complaint against an insurance company?

Click here to file a complaint with the Illinois Department of Insurance. If you choose to file the complaint online, select the link for workers' compensation. If you choose a hard copy of the form, click on the link for property and casualty.


IDOI cannot investigate the merits of a workers' compensation case, nor will it investigate a "he said/she said" argument. You must provide evidence of inappropriate behavior, e.g., show a company paid last year's fee schedule amounts in the new year. If you have a problem with a Third Party Administrator, identify the insurer that hired the TPA.

Does an out-of-state company have to provide Illinois workers’ compensation insurance?

Illinois law covers


  • persons whose employment results in injury within Illinois, or
  • persons whose work is principally localized within Illinois, or
  • persons whose contract of hire was made in Illinois.

If an out-of-state company conducts business with its employees in Illinois, i.e., does any work at all in Illinois, even if all the workers reside in the same state as the company, that company must provide a workers' compensation insurance policy that includes Illinois coverage for those workers.

If an employee from an out-of-state company is injured doing work in Illinois, he or she has the right to file a claim in Illinois. Only a workers' compensation insurance policy that includes Illinois on its coverage is valid.


Statute: Section 1(b)2

What if I suspect workers' compensation insurance fraud?


What happens if an insurer goes bankrupt?

If an insurance company or a group workers' compensation trust becomes insolvent, the Illinois Department of Insurance, Office of the Special Deputy, takes over the company and performs the receivership duties. Go to the OSD website for liquidation orders.


Insurance guaranty associations are established by state law to pay the covered claims of policyholders and other claimants of an insolvent insurance company. The workers' compensation claims of most bankrupt insurance companies are handled by the Illinois Insurance Guaranty Fund; however, some employers do not meet the guidelines of the Fund and will not be provided with coverage.


Click here for a list of employers NOT covered by the Guaranty Fund (last updated 3/27/14). If coverage is not provided by the Illinois Insurance Guaranty Fund, parties may proceed with their claims directly against the employer. This list may not be complete. We update the list based on information provided from the Fund.


If you have questions, call the Illinois Insurance Guaranty Fund at 312-422-9700.

Questions for employees

How do I know if my employer has workers’ compensation coverage ?

By law, employers must post a completed workers’ compensation notice in a conspicuous place in every work site. You have a right to know this information. If you do not see this notice, please contact us (312-814-6611).


You may also search online for coverage information.

My employer does not have workers' compensation insurance. What should I do?

If you suspect an employer does not have insurance, you may search our online insurance database, email our Insurance Compliance Division, or call our Information Unit (312-814-6611 or toll-free within Illinois 866-352-3033). We will try to identify the carrier; if we cannot find any evidence of insurance coverage, we will ask the employer to provide proof of insurance , but will not mention the name of the informant.

If I report my employer, do I have to give my name?

No. Anyone reporting an employer may remain anonymous.

Will my group health plan or occupational disability insurance cover workers' compensation cases?

No. Group health, occupational disability, general liability, disability or property insurance will not cover workers' compensation liability. Only a workers’ compensation policy fulfills this requirement. This coverage must be purchased from a carrier authorized to write workers' compensation insurance in Illinois.

Who can I contact if I still have insurance compliance questions?

Insurance Compliance Brochures