A guide to workers' compensation insurance for small business owners in the Sunshine state.
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Florida is known as the Sunshine State. However, if you’re a resident, you probably know that Florida doesn’t always live up to that nickname. A day in the sun can quickly get pounded out by torrential downpours.
The same analogy holds true for small businesses. One minute operations are running smoothly. The sky is blue. The sun feels warm. The next minute an accident happens, and the whole complexion of your day changes.
That’s why if you’re a small business owner, it pays to know everything there is to know about workers’ compensation insurance in Florida.
If that’s why you’re here, then you’re in the right place. We’ll give you some important information about workers’ compensation insurance, including if you need it, what typically determines its cost, and how you can get it.
Let’s get going.
That’s always the big question: How much will workers’ compensation cost me? The answer is: It depends. The cost of workers’ compensation insurance in Florida is based on three primary factors*, including:
Your cost is calculated per $100 of payroll. Therefore, the higher your payroll, the more you will likely pay in workers’ compensation coverage.
The industry you work in also has a lot to do with rates. The higher the risk of injury, the higher the rate. For example, if you run a business in farming or construction, you can expect to pay higher rates than if you’re a coffee shop owner or caterer.
Another factor that will affect your workers’ comp insurance rates in Florida is the history of claims filed against your business. Insurers look at both the number of claims and the seriousness of each claim when calculating premiums.
For more specifics, follow this link for a list of workers’ compensation rates in Florida by industry “class code.” Factors can change over time so it’s always best to double check what they are in your state and location.
According to Florida State law, in most cases, you are required to have workers’ compensation insurance if you have employees. However, it depends on the number of employees you have and the type of business you run. Let’s take a closer look.
If you run a non-construction business and employ four or more people, you must carry workers’ compensation insurance. The number of employees includes part-time, full-time, sole proprietors, corporate officers, and Limited Liability Company (LLC) members.
A Florida workers compensation exemption for non-construction is available for some businesses meeting the appropriate Florida workers compensation exemption criteria, detailed here.
Construction businesses are required to have coverage for every employee. If you’re self-employed in the construction business, the State of Florida requires that you get it for yourself.
If you’re not sure if your trade or business is classified as being in the construction industry, or if you qualify for a workers comp exemption in the Florida construction industry, you can find some info here.
If you’re a contractor (e.g., a builder) who hires a subcontractor (e.g., an electrician) to do a job for you, the subcontractor is typically responsible for their own insurance.
However, and this is important to know, you’re still responsible for ensuring that they have the coverage. For more information on this, click here.
Run a business in agriculture? If so, workers’ compensation coverage is required if you have at least six employees. Coverage is also needed if there are at least 12 temporary employees who work more than 30 days during a season, but no more than a total of 45 days in a calendar year.
If you own a business outside the state of Florida but employ workers in Florida, you still need a workers’ comp policy with an approved insurance carrier. “Approved” means that your insurance company “must be licensed in Florida, and Florida must be listed in Section 3A of the policy.”
The answer is that it all depends.
If you mean, “Does state law require that I have it?” then the answer is in most cases, yes — but it depends on the industry you’re in and the number of people working for you.
If you have a small non-construction business with four or more employees, you need it. If you have a construction business with just one employee, even if that one person is you, you need it. If you run a business in the agriculture industry and have at least six employees, you need it.
However, if you mean, “Do I need workers’ comp insurance even if state law doesn’t require that I have it?” then the answer is: Likely no. But you should probably still strongly consider getting it anyway. Let’s look at two scenarios to explain why.
Let’s say you’re a self-employed photographer. No one works for you. It’s just you. On one of your photo shoots, you’re so focused on your subject-matter that you don’t see the steep set of concrete stairs right next to you. Unfortunately, they see you, tripping you up, causing you to fall and breaking your leg. You won’t be back behind your camera anytime soon.
And although health insurance (if you have it) may cover some of your medical expenses, it won’t cover everything that workers’ comp insurance might cover, such as lost income due to your injury or rehabilitation costs. That leaves you dipping into your savings account while you're out of work recovering. No fun.
That’s why workers’ compensation insurance would be a good thing to have in this situation. You can learn more about workers’ comp for the self-employed in this useful guide.
Now let’s say you’re a florist with a small staff of three workers. As one of your employees fills an order for a bouquet of fresh-cut flowers, a glass vase gets knocked off the counter and shatters. In the process of cleaning it up, the employee gets badly cut. The cut is so deep that it requires surgery and a couple weeks of missed work.
Because you own a non-construction business with fewer than four employees, you’re likely not required by law to have workers’ compensation insurance. However, imagine how that employee would feel if you did. They might be able to recover lost wages while they were out of work.
It also would show your staff that you value them and want to take care of them. That could go a long way toward helping to retain your employees and building a stronger business.
Another thing to keep in mind? Let’s say the employee decides to sue you because of their injury. Workers’ compensation insurance could help protect you and your business from costs associated with the legal proceedings and outcome (up to your policy limits).
If you want to talk to a helpful human and get your business and employees covered via the phone, you can call 844-654-7272, Monday-Friday, 8 a.m.-8 p.m. ET, and one of our licensed insurance agents will help you through the process.
The short answer is: If you’re in the construction industry, yes. Otherwise, typically, no.
But let’s look a little closer at this, because when it comes to the construction business, it can get a bit confusing.
If you’re an independent contractor who has been hired to build a home for a client — and you hire a number of subcontractors to do the job — you’re responsible for your own workers’ compensation insurance, and each subcontractor is responsible for providing workers’ compensation insurance for their workers.
However, it’s important to note that you as the primary contractor are responsible for ensuring that the subcontractors have provided coverage for their workers. If a worker is injured, and there’s no workers’ comp insurance in place to protect them, then under Florida law, you could be responsible for the benefit payments.
Wondering how to get workers’ comp insurance in Florida? You can purchase a workers’ compensation policy from any insurance carrier licensed in that state, which would include us at Simply Business.
Along with providing workers’ compensation insurance, we also can provide information and answers to help you better understand what you may need and what you’re buying.
We also can make it quick and easy to get. Want a fast quote for workers’ comp coverage for your business? Check out our online quote tool. Answer a few questions related to your business, and we'll take care of it from there. It often takes just a few minutes.
Or give us a call at 844-654-7272, and one of our licensed insurance agents will help you get the workers’ comp coverage you need in Florida.
As mentioned earlier, even if you hire a subcontractor to do a job for you, they’re responsible for providing workers’ compensation insurance for their workers; however, it’s still your responsibility to verify that they have the coverage. So now let’s talk about obtaining proof of insurance.
You can use the free Construction Policy Tracking Database to verify the information you get from your subcontractors:
It’s pretty easy to do as well. Just enter the workers’ comp policy number or exemption information. The database will alert you if a subcontractor's policy is canceled.
For more information regarding requirements for obtaining evidence that subcontractors possess workers’ compensation insurance, see Rule: 69L-6.032.
If you’re thinking about “risking it” and not carrying workers’ compensation insurance, you may want to think twice. Here are some of the fines and penalties you could face if you didn’t comply:
It goes without saying that getting an insurance policy and not misclassifying the people who work for you is a smart way to go. Otherwise, the penalties could be enough to seriously hurt the business that you worked so hard to build.
Generally speaking, any non-construction business with fewer than four employees and any agricultural business with fewer than six employees may be exempt from workers’ compensation insurance in Florida.
If you have four or more employees working for you, you may want to look into a “pay-as-you-go” workers’ compensation payment schedule.
Typically, when you buy workers’s compensation for your employees, a lump-sum upfront payment is required at the beginning of their coverage period. It could be anywhere from 25% to 100% of the total premium, depending on the terms of your coverage.
However, with a pay-as-you-go solution, you can spread your payments out over the course of the year and make premium payments based on actual payroll numbers, not estimates. This can potentially free up important capital that you need for your business.
However, not every insurance company offers a pay-as-you-go solution, so it’s definitely something you want to ask about if you’re interested.
Alexander Graham Bell once said, “Before anything else, preparation is the key to success.”
Those are certainly words to live by, especially when running a business. Which is why you might want to look over your insurance coverages ahead of time, before an accident happens. Especially when it comes to workers’ compensation insurance requirements in the State of Florida.
After all, accidents and illnesses happen. And employees could miss work because of them. That includes you if you’re self-employed.
Wouldn’t it be nice to have the peace of mind knowing that you and your employees are covered and Florida’s workers’ comp codes are met? It might not make everything better, but it sure could make a bad day a lot less gloomy.
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*Harborway Insurance policies are underwritten by Spinnaker Insurance Company and reinsured by Munich Re, an A+ (Superior) rated insurance carrier by AM Best. Harborway Insurance is a brand name of Harborway Insurance Agency, LLC, a licensed insurance producer in all 50 states and the District of Columbia. California license #6004217.