Do I need workers compensation insurance?

Workers Compensation Insurance Requirements in Illinois

In Illinois, most businesses with employees are required to have workers compensation insurance. This insurance provides coverage for medical expenses and lost wages if an employee is injured or becomes ill due to their job.

When Workers Compensation Insurance Is Required

• Employers with one or more employees: If you have at least one employee, you generally must carry workers compensation insurance.
• Business owners who have employees: This includes full-time, part-time, seasonal, and temporary workers.
• Exceptions: Sole proprietors and partners without employees are usually not required to have this insurance but may choose to obtain coverage voluntarily.

Operational Considerations

• Compliance: Maintaining workers compensation insurance helps you comply with Illinois state regulations and avoid penalties or fines.
• Employee classification: Properly classifying workers as employees or independent contractors affects your insurance obligations.
• Payroll integration: Ensure your payroll system tracks employee hours and wages accurately, as this information impacts insurance premiums.
• Recordkeeping: Keep detailed records of employee injuries and claims to support reporting requirements and manage risk effectively.
• Insurance shopping: Compare policies from authorized insurers to find coverage that fits your business size and risk profile.

As of 2026

Illinois requires most employers to carry workers compensation insurance to protect employees and your business. Regularly review your coverage and employee status to stay compliant and operationally efficient.