Workers’ Comp Coverage: What an Illinois Business Should Know

Oswego, Montgomery and Morris businesses with one or more full- or part-time employees are required by the Illinois Workers’ Compensation Act to carry workers compensation insurance. The coverage provides medical treatment and wage replacement for workers who are injured or killed during their employment or as a result of it. It is estimated that just over 90% of Illinois employees are covered under the Act.

The insurance requirement applies to most persons, firms, public or private corporations, hospitals, public services, religious or charitable corporations, or associations that have any person in service or under contract for hire.

Workers’ comp is a vital and indispensable component of business operations in Illinois. If you are an employer in Oswego, Montgomery or Morris, this discussion will take a closer look at some of the things that are important to know about coverage.

Who Is Eligible for Workers’ Comp Coverage?

For an employee in Illinois (including Oswego, Montgomery and Morris) to qualify for workers’ compensation benefits, the following conditions must be met:

The employee must work for an employer whose business is covered by the Illinois Workers’ Compensation Act.

A covered injury or illness must arise from and in the course of employment for the covered business.

Proper oral or written notice of a covered accident or injury must be given to the employer and include the approximate date and location of the event (if known).

There is no waiting period for an employee’s workers’ compensation insurance to be in effect. An employee is covered by the Illinois Workers’ Compensation Act and must be insured beginning the moment of hiring.

Who Can Be Exempt from Workers’ Comp Coverage?

The following types of employees and employment are typically exempt from Illinois mandates for workers’ compensation coverage:

1) A sole proprietor or a partner or member of a limited liability company who elects not to provide and pay compensation for accidental injuries that are self-sustained.*

2) A corporate officer – defined as a bona fide president, vice president, secretary or treasurer – who individually elects to withdraw from coverage.*

(*Note that new law requires that employees who engage in extra-hazardous occupations must be covered by workers’ comp. This includes sole proprietors, business partners, limited-liability members and corporate officers. Aside from that condition, if a business owner or manager does not wish to be covered while providing workers’ comp for employees, the individual must notify the insurance carrier of the intent to opt out of coverage.)

3) A household or residence where a domestic worker is employed for less than 40 total hours per week for less than 13 weeks during a calendar year.

4) An agricultural enterprise, including aquaculture, that employs less than 400 working days of agricultural or aquaculture labor per quarter during the preceding calendar year, excluding working hours of the employer’s spouse and other members of his or her immediate family residing with him or her.

How Do New Employers Get Workers’ Comp Coverage?

Employers may either buy the insurance or obtain permission from the Illinois Workers’ Compensation Commission to self-insure. About 90% of Illinois employers purchase the insurance.

Workers’ compensation insurance in Illinois is sold in the private sector. With access to many different plans and carriers, Hometowne Insurance specializes in insurance for Oswego, Montgomery and Morris businesses that need operation-specific workers’ comp coverage.

Does Health or Occupational Disability Insurance Cover Workers’ Comp Cases?

It doesn’t. Other types of business insurance such as group health, occupational disability, general liability, disability or property insurance will not cover workers’ compensation liability. Only a workers’ compensation policy from an authorized carrier can insure these cases in Illinois.

Do Out-of-State Businesses Have to Carry Workers’ Comp for Illinois Employees?

Illinois law covers:

persons whose employment results in injury within Illinois
persons whose work is principally localized within Illinois
persons whose contract of hire was made in Illinois

If an out-of-state company conducts business with its employees in Illinois – i.e., it does any work at all in Illinois, even if all the workers reside in the company’s state – that company must have a workers’ comp policy that includes Illinois coverage for those workers.

If an employee from an out-of-state company is injured on the job in Illinois, that worker has the right to file a claim in Illinois. Only a workers’ compensation insurance policy that includes Illinois on its coverage is valid.

What Is the Penalty for Not Having Workers’ Comp Coverage in Illinois?

An employer that willfully fails to obtain workers’ comp insurance for employees will face a minimum fine of $10,000 and may be fined up to $500 for each day of noncompliance. Corporate officers can further be held liable if the company fails to pay the penalty.

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 Illinois 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. During the trial the burden also will be upon the employer to prove it was not negligent.

The Illinois Workers’ Compensation 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.

Since 2006, the Commission has collected over $8 million in noncompliance fines. The fines are deposited into the Injured Workers’ Benefit Fund.

What Are Employee Compensation Benefits Under Illinois Worker’s Comp?

Illinois worker’s comp has four main categories:

Temporary Total Disability – the injured employee receives payments during the period in which the employee is temporarily unable to return to any work or is released to do light-duty work but the employer is unable to accommodate him or her.

Temporary Partial Disability – payments may be received during the period in which an injured employee is still healing, working light duty either part-time or full-time, and earning less than he or she would have during the pre-injury employment.

Permanent Partial Disability – benefits are paid only if the job-related injury results in the complete or partial loss of a part of the body; the complete or partial loss of use of a part of the body; or the partial loss of use of the body as a whole.

Permanent Total Disability – benefits are defined as either the permanent and complete loss of use of both hands, both arms, both feet, both legs, both eyes or any two such parts (e.g., one leg, one arm); or a complete disability that renders the employee permanently unable to do any kind of work for which there is a reasonably stable employment market.

Find the Right Coverage for Your Business

The importance of having workers’ comp insurance in Illinois is clear. Your independent Hometowne Insurance agent can inform and advise you about your options and help customize the coverage plan that is best for you. Contact us today to further discuss workers’ comp insurance for your business in Oswego, Montgomery or Morris.

Oswego/Montgomery: (630) 554-4040
Morris: (815) 942-1312
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We also offer different options for workers’ comp coverage for businesses in nearby communities such as Batavia, Sugar Grove, Plano, Yorkville, Plainfield, Naperville and Aurora.