If your Illinois LLC has any employees, yes, it must carry workers' comp, because Illinois requires coverage from the first employee, full-time or part-time (820 ILCS 305/3). LLC members themselves are treated as covered persons who may exempt themselves, which is the opposite of the sole-proprietor rule: a member is on the policy by default and comes off only by notifying the carrier in writing (820 ILCS 305/1). So the question is how many people work for the LLC, and whether the owners want to stay on the policy.
Who this is for: owners of an Illinois LLC, whether a single-member LLC with no staff, a multi-member LLC, or an LLC running a payroll of employees.
The short version
- An LLC with any employee must carry coverage from that first hire.
- LLC members are covered by default and can exempt themselves by written notice to the carrier (820 ILCS 305/1).
- Exempting a member out does not touch your employees; they must always be covered.
- A single-member LLC with no employees is generally not required to carry, though the member can elect coverage on themselves.
- If your LLC hires subcontractors, you can owe benefits for an uninsured sub's injured workers (820 ILCS 305/1(a)(3)).
How Illinois treats LLC members
Illinois does not automatically leave LLC owners off the policy. The Commission lists members of limited liability companies among the owners who may exempt themselves from coverage, but who must still purchase insurance for other employees and notify their carrier in writing if they exempt themselves. In other words, a member is inside the policy by default and has to take an affirmative step to get out. There is no state owner-exemption registry; the mechanism is a carrier endorsement plus the written notice. Your regular employees cannot be exempted at all.
What applies to your LLC
| Your LLC setup | Is comp required? | What owners and staff should know |
|---|---|---|
| Single-member, no employees | Usually no | You are not required to cover yourself; you may elect coverage on yourself if you want your injuries paid |
| A few members, no other staff | Depends on the work | Members are covered by default; each may exempt out with written notice to the carrier |
| Any LLC with employees | Yes | Employees covered from day one; members may still exempt themselves out |
| LLC using uninsured subcontractors | Exposed either way | You can be liable for an uninsured sub's injured workers (820 ILCS 305/1(a)(3)) |
Exempting a member, the right way
Because a member is on the policy by default, an owner who wants off has to do it properly: you notify the carrier in writing and have the member removed by endorsement. Skip that step and the member is still covered and still charged for on the policy. Many owner-run LLCs that hire staff keep only the employees on the policy, which trims premium while still protecting the business from an employee-injury lawsuit. One construction note: some sources say construction owners cannot exempt themselves, but that restriction is not clearly written into the Act, so confirm your options with your carrier before relying on it. And if your LLC hires subcontractors, collect proof of coverage from every sub, because you can be responsible for an uninsured sub's injured workers.
A Chicago example
Illustrative, not a quote. A two-member electrical contracting LLC in Chicago runs the business with one apprentice on payroll. Because there is an employee, Illinois requires a policy, and the apprentice must be covered from day one. Both members do hands-on wiring and are on the policy by default, but each can notify the carrier in writing to exempt out if they want to trim premium; the apprentice stays covered no matter what. When a builder requires proof of coverage, the LLC produces a certificate the same day. See our workers comp for electricians page.
Real questions Illinois owners ask
Does my single-member Illinois LLC need workers comp?
Usually not by itself. A single member with no employees is not required to carry, though you may elect coverage on yourself if you want your own injuries paid.
Are LLC members automatically covered in Illinois?
Yes, by default. A member is treated as a covered person and stays on the policy unless they notify the carrier in writing to exempt themselves out.
How does an LLC member opt out of coverage?
By written notice. You tell the carrier in writing that the member is exempting out and have them removed by endorsement. There is no state form or registry for it.
If I exempt out, are my employees still covered?
Yes. Exempting a member out only affects that member. Every non-owner employee stays fully covered and cannot be excluded.
Does hiring an employee change whether I need coverage?
Yes. The moment your LLC has any employee, full-time or part-time, coverage is required from that first hire, even if the members exempt themselves out.
Can I be liable for a subcontractor my LLC hires?
Yes. If you use a subcontractor who has no coverage, you can be responsible for that sub's injured workers, so collect proof of coverage from every sub before they start.
Why Illinois owners choose Morrow
- We shop the right market for you. In Illinois you buy workers' comp on the open market from any private carrier licensed in the state, because Illinois has no state fund; if no carrier will take you, the Illinois Workers' Compensation Assigned Risk Plan (the assigned-risk plan) is the guaranteed fallback, so we can shop your rate freely and still keep a backstop for hard-to-place work.
- We catch pricing mistakes. Your price depends heavily on the category your work falls into for pricing (the class code). Put people in the wrong category and you overpay for years. We review your payroll and classifications before you buy.
- Proof of coverage, fast. Need a certificate (proof of coverage) for a general contractor or a landlord before Monday? We turn those around the same business day for most carriers.
- We help lower the score that drives your price. Insurers give you a score based on your past claims that raises or lowers your cost (the experience modification rate). We review it each year, flag errors, and connect you with return-to-work and safety resources that bring it down.
- Real people when a claim happens. When someone gets hurt, we stay involved through the life of the claim, not just at renewal.
Related Illinois guides
Every Illinois business is set up a little differently. These companion guides answer the same question for other situations, plus the national explainers behind the terms used here.
- Business insurance in Illinois (start here)
- Workers comp: the owner's overview
- I'm a sole proprietor: do I need workers comp?
- I own a corporation (C-corp or S-corp): do I need it?
- We're a partnership: do we need workers comp?
- We're a nonprofit: do we need workers comp?
- My workers are 1099: do I still need it?
- Only part-time or seasonal staff: do I need it?
- I only employ family: do I need workers comp?
- Remote or out-of-state staff: do I need coverage?
- What happens if I don't carry workers comp?
- How much does workers comp cost?
- How do I get workers comp (even if turned down)?
- What insurance do I need for a contractor license?
- Workers compensation insurance, explained
- What workers comp costs (national guide)
- Do sole proprietors need workers comp?
- What workers comp does not cover
- Illinois electrician workers comp
This guide is general information, not legal advice. Illinois rules and penalty amounts can change, so verify current requirements with the Illinois Workers' Compensation Commission (IWCC) or a licensed advisor before you rely on them. Last updated: July 2026.