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Indiana workers’ compensation law

Indiana law requires every business operating in the state to provide workers’ compensation insurance to their employees, with certain exceptions.

Who needs workers’ comp insurance in Indiana?

Most businesses with employees in Indiana must have workers’ compensation insurance to provide protection against workplace injuries and illnesses. Unlike workers’ comp laws in some states, the number of employees at a business has no bearing on the requirement.

The requirement of workers’ comp in Indiana applies to full-time employees, company executives, employees working outside the state (as long as they have an Indiana working relationship), part-time employees, minor employees, and certain students receiving federally funded on-the-job training.

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Who is exempt from workers’ compensation insurance in Indiana?

Some employees are exempt from Indiana workers’ compensation insurance and also are ineligible to elect optional coverage. These include:

  • Railroad employees covered under the Federal Employees Liability Act
  • Employees engaged in interstate or foreign commerce who have access to federal alternatives to state-based workers’ compensation (seamen, longshoremen, etc.)
  • Real estate employees (i.e., real estate agents who work as independent contractors for real estate brokers)
  • Independent contractors (based on a combination of IRS and state guidelines)
  • Independent contractors in the construction trades
  • Athletes on scholarship
  • Prison inmates
  • Volunteers
  • Coaches for youth sports teams

As an Indiana employer, do I need workers’ compensation insurance for myself?

In most cases, you must include yourself in your company’s workers’ compensation coverage. However, there are two key exceptions:

  • If you’re a sole proprietor
  • If you’re one of the parties in a partnership

In both of these cases, you don’t have to buy workers’ compensation for yourself. But you can if you think you need it. For example, if you do physical labor and are at risk of getting injured, it might make sense to include yourself in your workers’ compensation policy.

For what other Indiana workers is workers’ compensation optional?

Some people aren’t required to have workers’ compensation coverage. But business owners can elect to include them under their insurance policy. This option applies to:

  • Local police officers and firefighters under some conditions
  • Reserve police officers
  • Volunteers working for hazardous materials response teams
  • Executive officers of public or nonprofit corporations
  • Owner-operators who provide their vehicles and driver services to a trucking company that transports freight
  • Members and managers of limited liability corporations who actively work in the business
  • Individuals entered into a township, municipality, or county roster of volunteers
  • Volunteers who work at state-owned or operated psychiatric facilities
  • Other employees such as casual laborers, household workers, and farm or agricultural workers

What about independent contractors who work in the construction trades?

If you’re an independent contractor in the construction trades, those who hire you are not required to provide you with workers’ compensation insurance as long as you meet the IRS tests for independent contractor status. You can find these in IRS Publication 15-A, Employer’s Supplemental Tax Guide. If you meet those tests, you must then fill out a Workers’ Compensation Clearance Certificate with the Workers’ Compensation Board of Indiana and pay a $20 filing fee.

These requirements also apply to independent contractors who are sole proprietors.

How does workers’ comp work in Indiana?

Indiana business owners can compare quotes and purchase a policy from private insurance companies. (Insureon offers this service with its online insurance marketplace.)

Some employers receive state approval to self-insure their workers’ compensation claims. This means they pay for their employees’ medical and rehabilitation expenses after a workplace incident out of their own pockets.

How much does workers’ compensation insurance cost in Indiana?

Estimated employer costs for workers’ compensation in Indiana are $0.81 per $100 in covered payroll, according to the National Academy of Social Insurance [PDF].

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If you are ready to explore workers’ comp insurance options for your Indiana business, start a free online application today to compare quotes from top-rated carriers.

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