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.
Click
here to search for an employer's insurance coverage online.
FREQUENTLY ASKED INSURANCE QUESTIONS
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?
Do employees who are family members have to be insured?
Is there a waiting period for workers’ compensation
coverage?
What are the penalties if an employer fails to
carry workers' comp insurance?
I am a sole proprietor/business partner/corporate
officer/member of a limited liability company. Do I have to buy
w.c. insurance?
I
am a new employer. How do I obtain w.c. insurance?
What companies write workers' compensation insurance?
What
can I do if I have a question about my workers' compensation insurance
rate?
How do I file a complaint against an insurance
company?
Does an out-of-state company have to provide
Illinois workers’ compensation insurance?
What
if I suspect workers' compensation insurance fraud?
What happens if an insurer goes bankrupt?
What
insurers/pools have gone bankrupt recently?
Questions for employees
How
do I know if my employer has workers’ compensation coverage?
My
employer does not have workers' compensation insurance. What should
I do?
If I report my employer, do I have to give my
name?
Will
my group health plan or occupational disability insurance cover
workers' compensation cases?
Who can I contact if I still have insurance compliance questions?
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.
Fines are deposited into the Injured
Workers' Benefit Fund.
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).
The Commission does not have an opt-out form and does not
require individuals to use an opt-out form. |
| * |
If
your company is in the construction business, trucking business
operating at a construction site, or other extrahazardous
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. |
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 45% more than the open market--is administered by the National
Council of Compensation Insurance (800/622-4123. Ask for the
Illinois assigned risk plan.
What companies
write workers' compensation insurance?
Click
here to view a list of all 407 carriers or click
here to view the top 25 carriers in Illinois (2011 IL Dept. of Insurance data).
The workers'
compensation insurance business in Illinois is healthy and highly
competitive. In fact, Illinois has more workers' compensation carriers
than 48 other states.
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 John Gatlin at IDOI (john.gatlin@illinois.gov;
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
can I make 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. Please send us a copy, too, so we know what is happening.
IDOI cannot investigate the merits of the 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 well into the new year. If you have a problem with a Third Party Administrator, make sure you 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
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 7/11/12). 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.
What
insurers/pools have gone bankrupt recently?
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?
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