Yes. Workers’ compensation insurance is required in Indiana for nearly every employer that has at least one employee, whether that worker is full-time, part-time, or seasonal. The mandate comes from the Indiana Workers’ Compensation Act, and skipping it exposes a business owner to doubled compensation awards, criminal misdemeanor charges, and a court order to stop operating.
Which Indiana Employers Must Carry Coverage
Indiana Code 22-3-2-2 requires every employer and every employee in the state to comply with the workers’ compensation law, subject only to narrow exceptions.1Indiana General Assembly. Indiana Code 22-3-2-2 – Mandatory Compliance; Burden of Proof; Exemptions The statute defines “employer” broadly to reach any individual, firm, corporation, LLC, or other entity that uses the services of another person for pay.2Indiana General Assembly. Indiana Code 22-3-6-1 – Definitions; Exemptions
There is no minimum employee threshold. Hiring one worker triggers the obligation, and the schedule that worker keeps does not change the answer.
Executive officers of a corporation count as employees by default and are covered along with everyone else. An officer who wants out has to file written notice with both the corporation’s insurance carrier and the Workers’ Compensation Board. The exclusion doesn’t take effect until both the board and the carrier have received that notice.2Indiana General Assembly. Indiana Code 22-3-6-1 – Definitions; Exemptions Even when officers opt themselves out, the business still has to insure everyone else on the payroll.
Who Is Exempt
Indiana Code 22-3-2-9 places four categories of workers outside the mandatory coverage requirement:3Indiana General Assembly. Indiana Code 22-3-2-9 – Exempt Employees; Waiver of Exemption; Notice of Acceptance
- Casual laborers whose work is occasional and outside the employer’s usual course of business.
- Farm or agricultural employees, though employers may voluntarily provide coverage.
- Household employees performing domestic work in a private home.
- Certain nonprofit youth coaches who enter an independent contractor agreement with a 501(c)(3) to provide part-time coaching.
Sole proprietors, partners, and LLC members are not automatically treated as employees of their own business. They can voluntarily buy in by purchasing a policy and notifying the board, but they don’t have to cover themselves. Any workers they hire, however, still have to be insured.
Independent Contractors Are a Trap Worth Watching
Independent contractors are not employees, so they don’t trigger the mandate. Calling someone a contractor doesn’t make them one. Indiana looks at the actual working relationship, and the IRS framework groups the relevant factors into three categories:4Internal Revenue Service. Independent Contractor (Self-Employed) or Employee?
- Behavioral control: does the business control how the work gets done, or just the result?
- Financial control: does the worker invest in their own tools, risk profit or loss, and manage their own business expenses?
- Relationship type: is there a written contract, are benefits provided, and is the work a core part of the business?
Misclassifying an employee as a contractor can result in back-dated insurance premiums, penalty assessments, and full liability for injuries the worker suffers while uninsured. If the board or a court concludes the worker was really an employee, the employer is treated as if it had no coverage at all.
How to Satisfy the Requirement
Indiana Code 22-3-5-1 gives employers two ways to meet the insurance mandate:5Indiana General Assembly. Indiana Code 22-3-5-1 – Requirements; Self-Insurance; Security
- Buy a policy from a carrier authorized to write workers’ compensation insurance in Indiana.
- Self-insure by giving the Workers’ Compensation Board satisfactory proof of financial ability to pay claims directly and obtaining a certificate authorizing you to carry the risk without insurance.6Indiana General Assembly. Indiana Code 22-3-2-5 – Insurance; Certificates Authorizing Self-Insurance
Self-insurance is generally practical only for large employers with real financial reserves. Most small and mid-sized businesses go through a private carrier. Premiums vary widely by industry, payroll size, and claims history, and high-risk industries like construction pay substantially more than a low-risk office.
Penalties for Going Without Coverage
The penalties for operating without workers’ compensation insurance in Indiana stack. An uninsured employer usually faces several forms of liability at the same time.
Double Compensation Awards
When an injured worker files a claim against an uninsured employer, the Workers’ Compensation Board may award up to double the normal compensation, plus full medical expenses and reasonable attorney fees, all paid directly by the employer.7Indiana General Assembly. Indiana Code 22-3-4-13 – Reports of Injuries and Deaths; Violations of Article Without a carrier to absorb these costs, the business owner is personally on the hook for what can amount to hundreds of thousands of dollars in medical bills and lost wages.
Criminal Charges
Failing to carry the required insurance is a Class A misdemeanor. A conviction can bring up to one year of imprisonment and a fine of up to $5,000.7Indiana General Assembly. Indiana Code 22-3-4-13 – Reports of Injuries and Deaths; Violations of Article The board can also ask any court with jurisdiction to enter an injunction, which is effectively a court order forcing the employer to stop doing business in Indiana until proof of insurance is provided.
Loss of the Exclusive Remedy Shield
An employer with valid coverage generally cannot be sued in civil court by an injured worker; workers’ compensation is the exclusive remedy. Drop the coverage and that shield goes with it. The uninsured employer has no carrier to handle the claim, negotiate medical bills, or manage the case, and every dollar of treatment, every week of lost wages, and every attorney fee comes straight out of the business. For a serious injury involving surgery and long-term rehabilitation, the total can be financially devastating for a small business.
Proof of Coverage and the Required Poster
Compliance is more than just buying a policy. Employers have to keep proof of coverage available for inspections, audits, and contract bids. The main document is the Certificate of Insurance issued by the carrier, which lists the policy number, effective dates, and the insured entity’s name. Keep it current. An expired certificate is treated the same as no certificate.
Indiana also requires employers to post the workers’ compensation notice, State Form 18764, in a visible location accessible to all employees.8State of Indiana. Required Employer Posters The poster tells workers about their rights and gives them the insurance carrier’s contact information for filing claims. It’s available from the Indiana Workers’ Compensation Board website or through your insurance agent.