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Illinois business insurance: requirements and costs

Illinois has no state workers' comp fund and no headcount threshold: the Act covers every business in a listed hazardous trade, and any business selling goods or services to the public once its prior-year payroll tops $1,000.⁠1 NCCI files advisory loss costs and rates with the Illinois Department of Insurance, and has proposed a 0.5% loss-cost decrease for January 1, 2027.⁠4 Skipping coverage can be a felony, and the Commission can issue an ex parte work-stop order against a hazardous-trade employer.⁠2

Checked against 12 sources Last reviewed How we check figures

Illinois at a glance

Workers’ comp requiredAny employer in a hazardous trade; others once payroll exceeds $1,000
Where employers buy itPrivate insurers
Rates set byNational Council on Compensation Insurance
Employer comp cost, 2023$0.77 per $100 of covered wages (US $0.98)
Comp rate index, 2024$1.34, ranked 13 of 51 (1 = most expensive)
Employer health premium, 2025$9,724 single, $28,248 family (average total premium)
Auto liability minimum25/50/20

Comp is bought from private insurers. Employers can also be approved by the Illinois Workers' Compensation Commission (IWCC) to self-insure, which requires a financial statement and annual renewal, or join a group self-insurance plan.⁠2 Employers who cannot find a voluntary carrier use the assigned-risk market. According to NCCI figures in the Department of Insurance's 2024 oversight report, 26,317 assigned-risk policies took effect in 2023, a preliminary 3.1% share of the market.⁠3 The same report estimates the average manual rate for policies effective in 2023 at $1.21 per $100 of payroll in the voluntary market, down from $1.31 in 2022, and $4.04 in the assigned-risk market, up from $3.82.⁠3 By our calculation the assigned-risk average is about 3.3 times the voluntary average, so being placed in the plan is expensive.

NCCI's filings in Illinois are proposals to the Department. For January 1, 2026 it filed a 0.1% advisory-rate decrease, a 1.2% loss-cost decrease for the voluntary market and a 0.8% increase in assigned-risk rates, based on policy years 2022 and 2023.⁠5 For January 1, 2027 it filed on July 30, 2026 for a 0.3% advisory-rate increase, a 0.5% loss-cost decrease and a 3.1% assigned-risk increase, based on policy years 2023 and 2024.⁠4 NCCI attributes the small advisory increase to higher production and loss-based expenses, and the assigned-risk change to the uncollectible-premium provision.⁠4 Loss costs are only the loss portion of a rate. Insurers add their own expenses through a loss cost multiplier, so what you pay depends on the carrier's multiplier as well as the filing.⁠5 We did not confirm the Department's action on either filing, so treat the percentages as NCCI's proposals, not approved changes.

Illinois is cheaper than average on actual spending but not on manual rates. NASI estimates employers spent $0.77 per $100 of covered wages in 2023, down from $0.95 in 2019, a 19% drop by our calculation, against $0.98 nationally and a 16% national drop.⁠9 Oregon's 2024 ranking, which prices the same classes in every state from rates in effect January 1, 2024, puts Illinois 13th of 51 at an index of $1.34 per $100 of payroll, 123% of the median state (Georgia, $1.09).⁠10 The two measures differ because NASI reflects what employers paid after discounts, experience and class mix, and Oregon's reflects manual rates. In AHRQ's 2025 survey, 35.5% of Illinois private-sector establishments with fewer than 50 employees offered health insurance, against 32.1% nationally. Where they did, the average single premium was $9,865, 9% above the $9,034 national small-firm figure by our calculation, and the family premium was $27,996 against $24,176, about 16% higher.⁠11

For a budget, start with your class code and payroll, since the $1.21 average hides wide class spreads. If you work in construction, excavating, electrical work or warehousing, plan on the Act applying from your first employee: those trades are listed as extra hazardous and carry no payroll threshold.⁠1 Corporate officers and LLC members can opt out of coverage for themselves, but then they have no comp benefits.⁠1

Workers’ compensation in Illinois

The Act applies automatically to employers in listed extra-hazardous enterprises, including construction, excavating and electrical work, carriage by land (with more than 2 employees), warehousing, mining and quarrying, businesses handling explosives or hazardous gases, dusts or molten metal, and any business selling goods or services to the public with prior-year payroll above $1,000.⁠1 There is no minimum headcount.⁠1

Who is exempt

  • Sole proprietors, partners and LLC members who elect not to provide coverage for themselves
  • Corporate officers (bona fide president, vice president, secretary or treasurer) may withdraw by written notice to the insurance carrier, effective on receipt
  • Agricultural enterprises with fewer than 400 working days of agricultural labor per quarter in the preceding calendar year, not counting the employer's spouse and resident family
  • Households employing domestic workers, unless they work 40 or more hours a week for 13 or more weeks in a calendar year

Buying coverage and who sets the rates

Employers buy from a licensed insurer, qualify with the IWCC as individual self-insurers or join a group self-insurance plan.⁠2 Employers that cannot get voluntary coverage use the assigned-risk market, for which NCCI files a full rate; voluntary insurers use NCCI's advisory loss costs plus their own expenses.⁠3⁠5

Latest rate decision (1 Jan 2027): NCCI's July 30, 2026 filing with the Illinois Department of Insurance proposes, for January 1, 2027, a -0.5% voluntary loss-cost change, a +0.3% advisory rate change and a +3.1% assigned-risk rate change. This is a proposal; we did not confirm the Department's action. The January 1, 2026 filing proposed -1.2% loss costs. Official notice.

Individual employers apply to the IWCC with a current financial statement and renew annually. Employers with two or more violations of the coverage requirement may not self-insure for one year or until all penalties are paid.⁠2

Penalties for going without

A knowing failure to insure is a Class 4 felony and a negligent failure a Class A misdemeanor, each day a separate offense, for the employer, corporate officers and directors, partners and LLC members (not officers of publicly owned corporations).⁠2 After a hearing the IWCC can assess a civil penalty of up to $500 a day, minimum $10,000, doubling to up to $1,000 a day and $20,000 for repeat violations.⁠2 A Department of Insurance investigator can cite an uninsured employer for $500 to $10,000, payable with proof of coverage within 10 days.⁠2 The Commission can order a work stop; for extra-hazardous businesses a Commissioner can do so ex parte before a hearing.⁠2

What Illinois employers pay

Employer workers’ compensation costs per $100 of covered wages, 2019–2023
YearIllinoisUnited States
2019$0.95$1.17
2020$0.86$1.08
2021$0.82$1.01
2022$0.79$1.00
2023$0.77$0.98

Employer cost per $100 of covered wages: premiums paid by insured employers plus benefits and administrative costs of self-insured employers, divided by the wages of workers covered by workers’ compensation. The United States figure is NASI’s national total, which includes federal programs. Source: National Academy of Social Insurance (NASI), published 11 Aug 2026.

Oregon’s biennial comparison of workers’ comp rates puts Illinois’s index for rates in effect on 1 January 2024 at $1.34 per $100 of payroll, 23% above the national median of $1.09 (rank 13 of 51, where 1 is the most expensive). The index prices the same 50 risk classes, weighted by Oregon payroll, in every state, so it compares rate levels rather than what employers actually pay. Compare every state.

Employer health insurance in Illinois

Average annual premium per enrolled employee at private-sector employers, 2025
MeasureIllinoisFirms under 50United States
Single coverage, total premium$9,724$9,865$9,025
Family coverage, total premium$28,248$27,996$26,281
Employee share, single$1,858–$1,817
Employers offering coverage51.5%35.5%49.2%

Average total annual premium per enrolled employee at private-sector establishments that offer health insurance; the offer rate is the share of establishments offering coverage. Small firms have fewer than 50 employees. Source: Agency for Healthcare Research and Quality (AHRQ), Center for Financing, Access and Cost Trends, 2025 survey year. All states.

Commercial auto in Illinois

Every vehicle registered in Illinois, including business vehicles, must carry at least 25/50/20 in liability limits (bodily injury per person / per accident / property damage, in thousands of dollars). Official source.

Minimum liability limits are $25,000 for injury or death of one person, $50,000 for two or more persons and $20,000 for property damage per crash, in effect for policies issued or renewed on or after January 1, 2015.⁠6 We found no change in the current statute text.

Trucks and buses used in interstate commerce must also meet federal minimums of $750,000 to $5 million: see commercial auto minimums and what commercial auto costs.

Other Illinois rules that affect insurance costs

Liquor sellers and their landlords can be sued

Under the Liquor Control Act, anyone injured in person or property by an intoxicated person can sue a licensed seller whose sale or gift caused the intoxication. A person who owns or leases premises knowing alcohol will be sold there is jointly liable with the seller.⁠7 The statute caps recovery, and the caps are adjusted each January by the change in the CPI-U, so check the Comptroller's posted figures before pricing liquor liability.⁠7

Illinois paid leave is paid by the employer

The Paid Leave for All Workers Act entitles an employee to earn and use at least 40 hours of paid leave in a 12-month period, for any purpose.⁠8 The Illinois Department of Labor's table of state leave laws says the leave must be paid at the employee's base hourly rate, so it is a wage cost the employer pays directly.⁠12

Hazardous-trade employers face ex parte work stops

Because construction, excavating and electrical work are extra hazardous, an uninsured contractor can be stopped without a prior hearing, and law enforcement can be asked to keep workers off the site.⁠1⁠2

Illinois compared with its neighbors

Workers’ comp and health insurance costs, Illinois and neighboring states
Illinois$0.77$1.34$9,724
Indiana$0.57$0.71$8,355
Wisconsin$1.21$1.42$9,557
Iowa$1.02$1.21$8,620
Missouri$1.01$1.31$8,084
Kentucky$0.73$0.76$8,936

Sources

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National figures: NASI (employer comp costs), Oregon DCBS (rate index), AHRQ MEPS-IC (health premiums).

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Other states

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