If you have staff whose work is based in Illinois, you generally need Illinois workers' comp for them, wherever your company is headquartered. Illinois law requires a policy for an employee whose employment is principally localized in Illinois, regardless of where the accident happened or where they were hired (820 ILCS 305/1(b)(2)). Working from home does not change this; what matters is where the work is based.
Who this is for: Illinois employers with remote staff, and out-of-state companies with someone working in Illinois.
The short version
- An employee whose work is based in Illinois generally needs Illinois coverage, no matter where the company is headquartered.
- Illinois requires a policy for an employee principally localized in the state, wherever the injury happens (820 ILCS 305/1(b)(2)).
- Remote employees count toward the first-employee rule the same as on-site staff.
- Working from home does not remove a worker from the requirement.
- An out-of-state employer can add Illinois to its policy or name Illinois in an other-states endorsement.
Where the work is based drives the coverage
Workers' comp follows the place of employment, so a person whose job is based in Illinois generally needs Illinois coverage even if your headquarters is in Indiana or Missouri. Illinois defines its reach by where employment is principally localized, not by where the contract was signed or where an injury occurred, so a remote employee living and working in Illinois is squarely within the state's rule. For a company with people in several states, that usually means listing each state where employees actually work on the policy, so no one falls through a gap.
| Your situation | Illinois coverage needed? | Why |
|---|---|---|
| Remote employee living and working in Illinois | Yes | Their employment is principally localized in Illinois |
| Out-of-state company, one worker based in Illinois | Generally yes | An employee based in Illinois needs Illinois coverage |
| Illinois worker hurt on a short job out of state | Often yes | Illinois reaches an injury wherever it happens if employment is localized here |
| Illinois employer, worker fully based in another state | Usually that state's coverage | Coverage follows where the work is principally based |
Out-of-state employers with an Illinois worker
If your business is based elsewhere but you hire someone whose work is based in Illinois, you generally need Illinois coverage for that person, and the worker counts toward Illinois's first-employee rule. You have two clean ways to handle it: add Illinois to your existing policy so the state is listed for that employee, or write a separate Illinois policy. The mistake to avoid is assuming your home-state policy automatically answers an Illinois claim, because the claim can be brought under Illinois law when the work is based here. We can confirm which approach your carrier supports.
A Chicago example
Illustrative, not a quote. A software company headquartered in Indianapolis hires a developer who lives and works from home in Chicago. Because the developer's work is based in Illinois, the company generally needs Illinois coverage for that employee, and the developer counts toward Illinois's requirement. We add Illinois to the company's policy so the remote hire is properly covered under Illinois law, not just Indiana law. See our workers comp for technology firms page.
Real questions Illinois owners ask
Do I need Illinois workers comp for a remote employee here?
Generally yes. An employee who lives and works in Illinois usually needs Illinois coverage, no matter where your company is based, because coverage follows where the work is based.
I am an out-of-state company with one worker in Illinois. Do I need coverage here?
Usually yes. A worker whose job is based in Illinois generally needs Illinois coverage. You can add Illinois to your existing policy or write a separate one for that employee.
Can Illinois cover an injury that happened in another state?
Often yes. Illinois can reach an injury wherever it happens if the employee's employment is principally localized in Illinois, no matter where the accident occurred.
Do remote workers count toward the requirement?
Yes. A remote employee counts toward Illinois's first-employee rule the same as any on-site worker, so a single Illinois-based remote hire can require a policy.
Does my home-state policy cover an Illinois claim automatically?
Not always. A claim can be brought under Illinois law when the work is based here, so you usually need Illinois listed on the policy rather than relying on another state's coverage.
How do I add Illinois for one remote hire?
Two ways. You can add Illinois to your current policy so the state is listed for that employee, or write a separate Illinois policy. We can confirm which your carrier supports.
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 own an LLC: do I need workers comp?
- 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?
- 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)
- What workers comp does not cover
- Workers comp vs employers liability
- Illinois technology firm 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.