What insurance is required before hiring employees?

Required Business Insurance Before Hiring Employees in Indiana

Before hiring employees in Indiana, businesses must secure specific insurance coverage to comply with state regulations and protect both the company and its workforce.

Workers' Compensation Insurance

Workers' compensation insurance is mandatory for most Indiana employers with one or more employees. This insurance covers medical expenses and lost wages if an employee is injured or becomes ill due to work-related activities.

• Obtain coverage through a private insurer or the Indiana Worker’s Compensation Insurance Plan.
• Maintain accurate recordkeeping of claims and employee work status.
• Report injuries promptly to ensure compliance with state reporting requirements.

Unemployment Insurance

Employers must register with the Indiana Department of Workforce Development to participate in the unemployment insurance program. This is not a traditional insurance policy but a payroll tax that funds benefits for eligible unemployed workers.

• Set up proper payroll systems to withhold and remit unemployment taxes.
• Classify employees correctly to avoid misclassification issues affecting insurance and tax obligations.

Additional Insurance Considerations

While not legally required, other insurance types are operationally important when hiring employees:

• General liability insurance to protect against third-party claims.
• Employment practices liability insurance (EPLI) to cover claims related to workplace discrimination or wrongful termination.
• Health insurance considerations, especially for businesses with 50 or more full-time employees under federal regulations.

Summary

As of 2026, Indiana businesses must have workers' compensation insurance and participate in the state unemployment insurance program before hiring employees. Implementing proper payroll systems, maintaining accurate records, and considering additional insurance types will support compliance and operational efficiency.