What insurance is required when hiring workers?

Required Insurance When Hiring Employees in Illinois

When hiring employees in Illinois, businesses must secure specific types of insurance to ensure compliance and protect both the company and its workforce.

Workers' Compensation Insurance

Workers' compensation insurance is mandatory for nearly all Illinois 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 before employees begin work to avoid penalties.
• Maintain accurate records of claims and payments as part of compliance and reporting.

Unemployment Insurance

Employers in Illinois must register with the Illinois Department of Employment Security to pay unemployment insurance taxes. These taxes fund unemployment benefits for eligible former employees.

• Register promptly after hiring the first employee.
• Submit quarterly wage reports and tax payments to stay compliant.

Additional Insurance Considerations

While not legally required, consider the following insurance types to support operational risk management:

• Employer Liability Insurance: Often bundled with workers' compensation to cover legal costs from employee injury claims.
• Health Insurance: Required for employers with 50 or more full-time employees under federal regulations.
• Disability Insurance: Voluntary but can provide additional employee benefits.

Operational Tips

• Work with a licensed insurance provider familiar with Illinois requirements.
• Integrate insurance premium payments into your payroll system for streamlined operations.
• Maintain clear documentation of insurance policies and employee coverage status.
• Review insurance coverage annually to adjust for workforce changes.