If the only people who work for you are family, you probably still need workers compensation in Indiana. The state has no blanket exception for relatives, so a family member who is a genuine paid employee generally must be covered like any other worker. Whether you need a policy depends on how the business is set up and whether your relatives are truly employees or co-owners.
Who this is for: Indiana owners who employ only relatives, including family restaurants, farms that have taken on non-farm work, and small businesses run by a couple, parents and children, or siblings.
The short version
- Indiana has no general family exception, so a relative who is a real paid employee usually must be covered.
- How owners are treated depends on the business type, not on being family.
- A sole proprietor, partner, or LLC member is off by default; a corporation's officers are on by default.
- Farm and agricultural labor is a separate carve-out, exempt unless you elect into the Act.
- A relative who is really a co-owner is treated as an owner, not an employee.
Family members are employees too
Indiana does not give relatives a special pass. If your spouse, child, parent, or sibling is a paid worker in the business, they are generally an employee who must be covered, the same as an unrelated hire. What actually changes the answer is your business structure and whether the relative is an owner. A working owner is handled by the owner rules: sole proprietors, partners, and LLC members are off the policy by default and opt in, while a for-profit corporation's officers are on by default and opt out. A relative who is neither an owner nor a true volunteer, but a paid employee, needs to be covered.
| Who the family member is | Covered as an employee? |
|---|---|
| Relative on the payroll as staff | Yes, generally must be covered |
| Relative who is a co-owner (partner or member) | Off by default; may opt in |
| Relative who is a corporate officer | On by default; may opt out |
| Relative doing farm or agricultural labor | Exempt unless you elect into the Act |
| Relative who genuinely volunteers, unpaid | Usually not an employee |
The farm and casual-labor carve-outs
Two narrow exceptions matter for family businesses. Farm and agricultural labor is exempt from Indiana workers comp unless the employer affirmatively elects to accept the Act, so a family farm that only does farm work may fall outside the requirement, though electing in is an option. Casual labor that is not part of your usual business, like a relative helping with a one-off task unrelated to what you do, can also sit outside the definition of employment. These are genuinely narrow, and the moment a family member is doing regular paid work in your ordinary business, treat them as an employee who must be covered.
A Terre Haute example
Illustrative, not a quote. A Terre Haute family restaurant is run by a married couple as an LLC, with their adult son cooking on the line for a wage. The two spouses are LLC members, so they are off the policy by default and can opt in. Their son is a paid employee, not an owner, so Indiana requires him to be covered from day one. The couple buys a policy covering their son, decides whether to opt themselves in, and keeps a certificate for the landlord. See our workers comp for restaurants page.
Real questions Indiana owners ask
Do I need workers comp if I only employ family in Indiana?
Usually yes. Indiana has no blanket family exception, so a relative who is a genuine paid employee generally must be covered like any other worker. The exceptions turn on ownership or a narrow carve-out like farm labor.
Is my spouse an employee if they work in the business?
It depends on their role. If your spouse is a paid worker and not a co-owner, they are generally an employee who must be covered. If they are a partner or LLC member, they are an owner who is off by default and may opt in.
Do my kids on the payroll need to be covered?
Generally yes. A child who is a paid employee in your ordinary business is treated like any employee, so Indiana requires coverage. There is no automatic exception just because they are your children.
What if we run a family farm?
Farm and agricultural labor is exempt from Indiana workers comp unless you elect to accept the Act. So a family farm doing only farm work may fall outside the requirement, though you can choose to opt in.
Are the owners covered if we are all family?
Owners are handled by business type, not by being family. Sole proprietors, partners, and LLC members are off by default and opt in, while a corporation's officers are on by default and opt out.
Does a relative who just helps out occasionally count?
Maybe not. Casual labor that is not part of your usual business, or a genuine unpaid volunteer, can sit outside coverage. But regular paid work in your ordinary business makes them an employee.
Why cover family at all if I trust them?
Because an on-the-job injury to a relative is still a real medical and income loss, and going without required coverage exposes you to penalties. Comp pays their medical bills and lost wages and protects the business.
Why Indiana owners choose Morrow
- We shop the right market for you. In Indiana you buy workers comp on the open, competitive market from any private insurer licensed in the state, because there is no state fund, and if no carrier will take you the state's assigned risk plan is the guaranteed backstop, so we can shop your rate freely and still have a fallback 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 Indiana guides
Every Indiana 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 Indiana (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?
- 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?
- Hiring your first employee: what changes
- Indiana restaurant workers comp
This guide is general information, not legal advice. Indiana rules and penalty amounts can change, so verify current requirements with the Worker's Compensation Board of Indiana or a licensed advisor before you rely on them. Last updated: July 2026.