Illinois self-insurer comp bonds.
From $4,000.

What the self-insurer’s bond actually guarantees

Illinois lets an employer skip the insurance policy and pay compensation claims directly — but only with the Commission’s permission, and only against security. The bond form says it plainly: the principal and surety are bound unto the people of the State of Illinois for the use and benefit of all employees of the Principal who may be entitled to compensation under the Workers’ Compensation Act and the Workers’ Occupational Diseases Act. The employee, not the State, is the party this protects.

Approval runs through the Self-Insurers Advisory Board, which reviews an applicant’s financial condition, the nature of its employment, payroll, claim experience and claims-administration program, and scores three financial ratios — current assets to liabilities, capital and retained earnings to sales, and capital and retained earnings to long-term debt — before recommending to the Commission. Applications go in electronically at least 60 days ahead of the requested effective date. The published minimum security requirement is $200,000; a surety bond, a letter of credit, or an escrow deposit of cash or negotiable government bonds all satisfy it.

The number is not permanent. Each year, on the renewal application that keeps the privilege alive, the security requirement is re-evaluated and adjusted against current payroll and open reserves — which is why self-insurers often ride a bond up or down over time rather than keeping one figure for a decade. An employer that has been self-insured for three consecutive years and scores a perfect 18 on those ratios for three consecutive audited years can be relieved of security altogether. And if a private self-insurer becomes insolvent, the statutory machinery around the Illinois Self-Insurers Security Fund is what reaches the bond. It is not insurance for you — if the surety pays, you reimburse the surety.

You need this bond if you are