When you launch a business in the state of Illinois, one critical stage is ensuring that you’re properly covered with the right small business insurance. Doing so is the only way to ensure that a lawsuit, accident, or other unforeseen circumstance won’t be a critical blow to your new business.
While business owners have to choose what kind of insurance coverage they want for their business, there is one area where proper coverage is legally mandated for most businesses: workers’ compensation. The state of Illinois oversees this coverage for work-related employee injuries and occupational illnesses, and there are specific coverage requirements based on your business’ size and specifications.
Does My Business Require Coverage?
Workers’ compensation for Illinois businesses is required for almost every person employed besides sole proprietors, business partners, corporate officers, or members of limited liability companies. This requirement is one of the country’s most comprehensive policies, with about 91 percent of Illinois employees covered by the law. Unlike in some other states, there is no exception for smaller businesses—if you employ even one employee, they must be covered in case of injury.
Penalties back up the law and employers who knowingly and willfully fail to obtain proper insurance for their employees can be fined up to $500 a day. Corporate officers can be held personally responsible, with fines being used to fund the Injured Workers’, Benefit Fund.
What Does Illinois Workers’ Comp Cover?
While workers’ compensation covers almost all injuries that are a result of the employee’s work, there are some exceptions. The coverage is broad and includes pre-existing conditions that are worsened by the work and job-related injuries that happen off the premises.
What workers’ comp doesn’t cover in Illinois are injuries caused by the employee’s negligence. For example, self-inflicted injuries or those incurred while the employee was committing a crime or violating company policy are not covered. It also doesn’t cover off-the-job injuries.
If an injury is covered, workers’ comp will cover all major costs, including medical and rehabilitative bills. It will pay both temporary benefits for total disability while the employee is off work and partial disability benefits while the employee is on light duty and job retraining if needed. If an employee is permanently disabled and unable to return to work, the policy will pay out permanent total disability benefits.
Where Can an Employer Purchase a Plan?
There are several possibilities for insurance plans for new businesses in the state of Illinois.
- From Private Insurers?– This is the most common choice for insurance, especially as most businesses will have private insurance for their building and other assets. Most insurers will offer workers’ compensation as an add-on to their existing plans. However, how much you pay will vary—insurers can raise rates or outright reject an insurance application for a risky industry or an existing business with a high history of past claims.
- From a State Fund?– While many states offer state workers’ compensation funds, Illinois is not one of them.
- Through an Insurer of Last Resort?– This is a common alternative to state funds. As employers are required to have workers’ compensation insurance and private insurers can reject an application, the state partners with an insurance agency that offers a policy to those with unusually high insurance risk. In Illinois, this program is administered by the National Council of Compensation Insurance.
- Apply for Self-Insurance?– An alternative for private employers is to forgo outside workers’ compensation insurance and assume the liability for covering claims personally. The state of Illinois requires self-insuring businesses to meet certain requirements, including established financial strength. An employee seeking this status must apply through the Illinois Workers’ Compensation Commission and renew it every year so the board can monitor their ability to pay out claims.
Before You Start, Ensure You’re Covered
Illinois’ strict workers’ compensation laws don’t just protect employees—they protect the employers from serious financial blows. When looking at the options for coverage you have as a business owner, picking the one that’s right for your model involves several factors, including your number of employees and the common risks in your industry. The right choice is the one that gives your business the security it needs to operate safely for years to come.
