2020 Guide: Illinois Business Insurance Requirements
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It has never been more important for entrepreneurs to understand Illinois business insurance requirements. A small business is a company with five hundred employees or less. Small businesses are a vital part of our economy and comprise 2 of 3 jobs in the Illinois economy. SBA.gov reports that 2.4 million Illinoisans are employed by the over 1.2 million small businesses in Illinois.
Illinois Business Insurance Requirements
There is a huge selection of different insurance and coverage types for your small business. Common coverage requested by all businesses include commercial general liability, property, commercial umbrella, workers compensation, commercial auto insurance, etc.
CGL, commercial general liability insurance, is the coverage you need to protect your small business from losses from claims by any third-party. Generally, commercial general liability insurance provides coverage for bodily injury, personal injury, advertising injury, legal defense and judgements, and property damage.
Property insurance is the coverage your small business needs if it owns the commercial property it does business from. Business personal property includes coverage for your business’ contents including equipment, furniture, inventory stock, etc.
Is Insurance Mandatory For an Illinois Business Including Corps, Inc. and LLC.
In the state of Illinois, general liability insurance is not a requirement to operate your small business. But that doesn’t mean that it shouldn’t be considered as an important way to safeguard your business. Property insurance may not be necessary for your small business if it does not own the property of which is does business, or any contents or inventory.
A small business in Illinois is required to carry workers compensation insurance. This requirement is only true if that small business has at least one full or part time employee.
Another insurance requirement in Illinois is business auto liability insurance. A commercial auto liability insurance policy protects your driver, as well as your business, from third-party claims as a result of a car accident.
Cases When Business Insurance is Required
There are a few instances where business insurance is required. But keep in mind, different businesses need different types of business insurance to cover their unique risks.
IL Business Insurance Required by Federal or Local Government
Many main street type businesses are not required to obtain general liability or property insurance by the state, city or town it does business in. But, the state of Illinois has mandated certain types of business to obtain insurance and file it to the state. Some of these businesses include:
- Auto Dealers
- Truck Drivers
- Taxi / Livery Service
- Tow Truck Business
- Liquor Stores, Bars and Taverns
- Special Events
A common attribute to the above businesses is the use of a vehicle. The state of Illinois verifies these businesses carry adequate liability limits to protect citizens in the state in the event of an accident.
Business Insurance Required by Employers
More so, some employers require their employees or contractors to obtain insurance coverage. This is common for:
- Food Delivery Drivers
- Rideshare Drivers
- Contractors and Subcontractors
- Consultant’s Professional Liability
It is also important to note that just because the state of Illinois, or an employer, does not require your business to carry insurance, doesn’t mean you’re off the hook. If your business rents a commercial unit, your landlord may require certain coverage to protect him/her in the event of a catastrophe.
Business Insurance Required by Landlords
Typically, landlords and commercial property managers require $1,000,000 of commercial general liability from the lessee. Others may require a commercial umbrella policy, workers compensation, among other coverages.
Read more: Do You Need Insurance as an Illinois Landlord?
Certificate of Liability Insurance
Whether business insurance is required for federal or local government, a company you do work for, or a landlord or property management company, proof or evidence of insurance will be requested from a business to verify certain coverage.
A certificate of insurance, sometimes referred to as Acord 25, is a single-page document used to provide information on specific insurance coverage that is found throughout a business insurance policy.
This certificate shows certain information including the type and limits of coverage, insurance company and NAIC rating, policy number, effective and expiration dates, named insured, etc.
How Much Liability Insurance Should You Carry?
No two businesses are the same. Based on the type and size of your business, commercial general liability insurance can range from $350,000 CSL to $2 mil CSL. High risk business such as restaurants and bars, for example, should opt for higher liability coverage. It is always best to speak with an experienced and licensed agent for advice.
Illinois Business Insurance Costs.
Business insurance premiums in the state Illinois are based on various factors from type of business operations, to amount of coverage, size of business, number of employees, etc.
In some Illinois cities such as Chicago, Joliet, Elgin, Rockford and Aurora, a business liability insurance policy can start at a yearly rate of $350, with convenient monthly payment options.
Business insurance for barber shops, offices, hair salons and other low risk main street businesses typically cost about $50 per month. Other types of businesses such as restaurants, auto dealerships, auto service shops, contractors and similar can expect Illinois business insurance to cost $100 per month.
For more information or to request a small business insurance quote, please contact our office today: (800) 641-7488
