If you're running a business in Indiana, even with just one employee, you need to understand workers' compensation requirements. Here's the thing that surprises most new business owners: Indiana doesn't give you any grace period based on company size. Hire your first employee? You need coverage that same day. The state takes workplace injury protection seriously, and the penalties for non-compliance can shut down your business faster than you'd think.
Let's walk through exactly what you need to know to stay compliant, protect your employees, and avoid costly fines that could cripple your business.
Who Needs Workers' Comp in Indiana?
Indiana's rule is straightforward: if you have one or more employees, you must carry workers' compensation insurance. Period. There's no sliding scale, no exemption for tiny startups, no "wait until you hit five employees" threshold like some other states have. One employee equals one workers' comp policy.
Under Indiana Code 22-3-2, every employer must either purchase workers' compensation insurance through an authorized carrier or prove to the Workers' Compensation Board that they have the financial ability to self-insure and pay claims directly. For most small and medium-sized businesses, self-insurance isn't realistic—the financial requirements are steep, and you'll need serious reserves to qualify.
Coverage starts from day one of employment. The law explicitly states that employees are covered from their first day on the job, so you can't delay getting a policy while someone's in their probationary period or training phase.
Who's Excluded From Coverage (And Who Can Opt In)
Indiana automatically excludes certain business owners from workers' compensation coverage requirements. If you're a sole proprietor, partner in a partnership, or a member or manager of an LLC, you're not required to include yourself in your company's workers' comp policy. That said, you have the option to elect coverage if you want the same protections your employees receive.
Independent contractors are a different story entirely. True independent contractors aren't considered employees under Indiana law, so they're not covered by your workers' comp policy. But here's where it gets tricky: Indiana uses IRS rules to determine who qualifies as an independent contractor, and those rules are stricter than most people think. Just because you call someone a contractor and issue them a 1099 doesn't automatically make them one in the eyes of the law.
If you hire independent contractors, they need to obtain a Worker's Compensation Exemption Certificate from the Indiana Department of Revenue. This annual certificate costs $20 ($5 to the Department of Revenue and $15 to the Workers' Compensation Board) and proves they're exempt from coverage requirements. Contractors must have all their Indiana tax returns filed and current, with no outstanding tax debts, to qualify. When a contractor gives you a copy of this stamped certificate, it protects you from liability claims—the certificate is binding and holds you harmless if that contractor gets injured while working for you.
What Happens If You Don't Carry Coverage
The penalties for skipping workers' compensation insurance in Indiana are brutal, and they stack up fast. Failure to carry coverage is classified as a Class A infraction with fines up to $10,000 per violation. But it doesn't stop there—the state can also hit you with civil penalties of up to $50 per day per uncovered employee. If you have ten employees and go six months without coverage, you're looking at over $90,000 in penalties alone.
The Workers' Compensation Board can issue a stop-work order, forcing you to cease all business operations until you obtain coverage and pay every penny of your penalties. Your business grinds to a halt. Revenue stops. Contracts get breached. Customers go elsewhere. For many small businesses, a stop-work order is a death sentence.
And here's the worst part: if an employee gets injured while you're uninsured, you're personally liable for all their medical expenses, lost wages, and disability benefits. There's no cap, no limit, no protection. A serious workplace injury could cost hundreds of thousands of dollars, and you'll pay every cent out of pocket. Some violations can even carry criminal penalties—failure to insure is classified as a misdemeanor punishable by up to one year in prison and a $5,000 fine.
Your Employer Responsibilities Beyond Just Buying Insurance
Purchasing a workers' comp policy isn't the end of your compliance obligations. Indiana law requires you to post a notice in your workplace where employees can easily see it. This notice must include your insurance carrier's name, address, and phone number, or the contact information for whoever administers your claims if you're self-insured. Failing to post this notice can result in civil penalties.
You must report all workplace injuries to your insurance company immediately. Any injury that causes an employee to miss at least one day of work must also be reported to the Workers' Compensation Board. Miss these reporting deadlines, and you're looking at fines for the first violation ($50), second violation (up to $150), and third or subsequent violations (up to $300). Repeatedly failing to report injuries could also result in a bad faith judgment against your company, with fines reaching up to $20,000.
Keep detailed records of every workplace injury, no matter how minor it seems. Document what happened, when it happened, who witnessed it, and what medical treatment the employee received. These records protect you if a claim gets disputed later.
Understanding 2025 Benefit Updates
As of July 1, 2025, Indiana increased the maximum weekly benefits for injured workers. The maximum weekly payment for temporary total disability, permanent total disability, and death benefits is now $1,278 per week. This increase affects what your insurance carrier might pay out for serious workplace injuries, which in turn influences your premium calculations.
Understanding these benefit levels matters because it shows you what's at stake when workplace safety fails. A worker who becomes permanently disabled could receive over $66,000 per year in benefits—coverage your insurance policy provides, but you'd be paying out of pocket without one.
How to Get Started and Stay Compliant
Getting workers' compensation coverage in Indiana is straightforward. Contact licensed insurance carriers authorized to write workers' comp policies in Indiana, or work with an independent insurance agent who can shop multiple carriers for you. Your premium depends on your industry classification, payroll size, and claims history. High-risk industries like roofing or construction pay more than low-risk office environments.
Once you have coverage, keep your policy active and current. Letting coverage lapse, even for a few days, exposes you to all those penalties we discussed earlier. Set calendar reminders for renewal dates, and make sure your payroll estimates stay accurate so you're not underinsured.
Visit the official Indiana Workers' Compensation Board website at in.gov/wcb for forms, reporting tools, and compliance resources. The site offers everything you need to file injury reports, understand your legal obligations, and access the WCB Gateway for online claim management. Staying informed about requirement changes protects your business and keeps you on the right side of Indiana law.
