What is Workers Comp Insurance?

If you have employees, your business needs Workers Compensation insurance (also called Workmans Compensation or Work Comp for short). Workers Comp protects both you and your employees after a work-related injury or illness. The policy helps cover your employee’s medical bills, recovery costs, and wages from lost work time.

Workers Comp Insurance Companies in Florida

Although rates are set by the state, not all insurance companies participate in the Workers Comp market. That being said, there are many domestic and national companies Insurance Resources works with, such as the following:

  • AmTrust
  • Foremost
  • FUBA
  • Guard
  • Hartford
  • Liberty Mutual
  • Markel
  • Nationwide
  • Travelers

Is Workers Comp Required for My Business?

Most states in the US require businesses to carry Work Comp. In Florida coverage requirements are based on the business industry type, number of employees, and type of organization.

Construction Industry Businesses

Construction businesses are required to have Work Comp insurance if they have 1 or more employees, including corporate officers or LLC members. The list of construction industries bound by this requirement can be found at the Florida Administrative Code’s website. The owner of a construction industry businesses may chose to exempt themselves from the Work Comp requirements to save on insurance premium.

Non-Construction Industry Businesses

Non-construction businesses (such as small businesses offices and restaurants) are required to have Workers Comp insurance if they have 4 or more employees, including corporate officers or LLC members. Sole proprietors and partners in a partnership are not included as employees unless they file a form DWC 251 with the Florida Division of Workers Compensation.

Agricultural Industry Businesses

Agricultural businesses are required to have Workers Comp insurance if they have 6 regular employees or 12 seasonal employees that work more than 30 days during a season but no more than 45 days in a calendar year.

Out of State Businesses Operating in Florida

You must notify your carrier before working in Florida if your business is domiciled in another state. The carrier you are insured with must be approved by the Office of Insurance Regulation. It is also recommended that the state of Florida be added to the approved states in Section 3A of the Workers Comp policy.

What If I Decide Not to Pay for Workers Comp Insurance?

The state will issue a stop-work order for a business if an employer is found to be operating without proper Workers Comp coverage. The stop-work order requires the business to cease ALL operations until it complies with the Workers Comp law. The business also has to pay a penalty of 2 times the amount they would have paid for the manual premium in the prior 2 years.

Do My Subcontractors Need Workers Comp Insurance?

The overwhelming answer to this question is YES! If a subcontractor, or a subcontractor’s employee or subcontractor is injured on a job without Workers Comp insurance, then the general contractor becomes responsible for the payment of benefits for the work-related injury, illness, or fatality.

Insurance carriers also perform audits at the end of the year. If you cannot provide proof of coverage for your subcontractors, you will have to pay extra premium at audit for their payroll.

How Do I Ensure that My Subcontractors Have Valid Workers Comp Insurance?

Before you have a subcontractor step foot on your job site or place of employment, you need to make sure they have a valid certificate of insurance with proof of General Liability and Workers Comp insurance. Unfortunately, this is not enough, as policies can cancel mid-term and individuals can forge certificates of insurance. Your best bet is to go to the Division of Workers Compensation’s Compliance Proof of Coverage website and search each business that you work with.

I Use 1099 Independent Contractors, So I Don’t Need Work Comp Coverage…. Right?

Typically the answer to this question is NO!

Florida law does not allow for independent contractors in the construction industry.

In non-construction industries there are specific criteria to identify individuals as a 1099 independent contractor. In order to meet the definition of an independent contractor, at least 4 of the following criteria listed in the Florida Statutes must be met:

An Independent contractor must…

  • Maintain a separate business with his or her own work facility, truck, equipment, materials, or similar accommodations
  • Hold or has applied for a federal employment identification number (FEIN), unless the independent contractor is a sole proprietor who is not required to obtain a FEIN under state or federal regulations
  • Receive compensation for services rendered or work performed, and such compensation is paid to a business rather than an individual
  • Hold 1 or more bank accounts in the name of the business entity for purposes of paying business expenses or other expenses related to services rendered or work performed for compensation
  • Perform work or is able to perform work for any entity in addition to or besides the employer at his or her own election without the necessity of completing an employment application or process
  • Receive compensation for work or services rendered on a competitive bid basis or completion of a task or set of tasks as defined by contractual agreement, unless such contractual agreement expressly states than an employment relationship exists

If 4 of these criteria do NOT exist, an individual may still be an independent contractor depending on the nature of the situation and if they meet the exceptions outlined in the Florida Statutes. The ultimate decision as to whether or not an individual is an independent contractor or an employee is with the person deemed an independent contractor. Therefore, the independent contractor has the burden of proving that he or she is an independent contractor.

Can I Be Exempt from the Workers Comp Insurance Requirement?

Sometimes officers of a corporation or members of an LLC chose to be exempt from the Workers Comp statutes. Most business owners do this to reduce the amount of payroll included on the policy, and therefore reduce the policy premium.

To be exempt an owner or member must meet all requirements set forth by the state. Exemption eligibility differs between the corporations and LLCs and between the construction industry and non-construction industry employers. For example, no more than 3 officers or members may file an exemption if they are in the construction business industry, while no more than 10 members of a LLC may elect to be exempt in the non-construction industry.

To view the requirements and apply for an exemption you can visit the Division of Corporation’s Exemption website.

Workers Comp Benefits

Workers’ compensation is known as exclusive remedy for employee’s occupational injuries and therefore there are no specific limits set on the policy. As long as you have coverage, your employees are typically barred from suing your business for the injuries they sustain. Please note are some exceptions this, such as willful negligence, and claims covered by Employer’s Liability.

What is Employer’s Liability Insurance?

Most every Workers Comp policy actually has 2 coverages. The first, Workers Comp, provides protection for your business’ employees as required by the state. The second part, Employer’s Liability provides coverage for legal liability arising out of an employee injury that is not covered by Workers Compensation.

Employer’s Liability claims usually fall into one of the 4 categories:

  • Third party over actions
    • This is when a 3rd party is held liability for your employee’s injury, and files a countersuit against your business
    • For example, your employee is injured by a machine at your office. The injury resulted in part because the machine was not well maintained. If your employee sued the manufacturer of the machine, this coverage could protect you against a contributory negligence claim.
  • Dual capacity suits
    • This claim happens when an employee files suit against their employer when a product the businesses manufactures is the cause of injury. In this situation your business could have to respond as both the employer and manufacturer.
  • Consequential bodily injury
    • This claim happens when an employee’s family member has bodily injury as a result of the employee’s injury. For example, your employee caught a disease at work and then transmitted it to his wife.
  • Loss of consortium
    • This claim occurs when your employee’s spouse can no longer engage in marital relations with your injured employee.

Employer’s Liability Limits

Unlike Workers Comp, Employers’ Liability has limits. The basic limit is $100k per occurrence for bodily injury, $100k per employee for bodily injury by disease, and $500k aggregate for bodily injury by disease. Many employers decide to increase these limits to either $500k for each coverage or even $1 million for each coverage.

How Much Does Workers Comp Insurance Cost?

This answer to this question is pretty simple in Florida if you know your employee’s classification of work, total employee payroll, and your company’s loss history.

For most states, the National Council for Compensation Insurance (NCCI) provides rate recommendations to the state’s Workers Compensation division. This holds true for Florida. Florida’s Division of Workers Compensation uses the NCCI’s recommendations to set rates for each business classification. These manual rates are required to be used by all carriers offering guaranteed cost workers’ compensation insurance. From time to time the rates may change based on updated loss trends, medical costs, or legal cases.

The manual premium is determined based on a rate charged per $100 of payroll. To come up with your manual premium you take the class code rate times the payroll for the class code and you divide by 100.

Premium = Class Code Rate * (Payroll/100)

The rates charged for each business classification can vary greatly depending on the inherent risk of the class. Fore example, the rate charged for a clerical office employee is significantly less than a roofing contractor.

What Is an Experience Mod and How Does It Work?

Your experience modification (or “mod” for short) is determined by NCCI. It is calculated using your business’ loss experience from the prior 3 yeas (not including the most recent). The mod is applied against the manual premium and can result in either a premium credit or debit. The standard experience mod is 1.0 and that is the mod for all new businesses. An experience mod of less than 1.0 results in a premium credit, while an experience mod over 1.0 can result in a premium debit.

Are There Any Premium Credits Available for Work Comp Insurance?

In Florida there are 2 Workers Comp premium credits available to employers. The forms must be completed, notarized, and submitted to the insurance carrier to apply the appropriate credits.

  • Safety Program Premium Credit
    • Florida employers are eligible for a 2% premium credit if they have a safety program that complies with Section 440.1025 of the Florida Statutes. The safety program must include the following
      • Written safety policy and safety rules
      • Safety inspections
      • Preventative maintenance
      • Safety training
      • First aid
      • Accident investigation
      • Necessary record keeping
    • Drug-Free Workplace Premium Credit
      • Florida employers are eligible for a 5% premium credit if they have meet the guidelines of a drug-free workplace.

Workers Comp Audit

Workers compensation is an auditable policy. Therefore, you are always made whole at the end of the policy term when the carrier conducts the policy audit. The carrier will typically ensure correct payroll and class codes were used. If you had more payroll than originally estimated, your premium will increase. If you had less payroll, your premium will decrease.

Workers Comp Payment Options

Workers’ comp carriers typically provide many ways to pay for coverage. Most every carrier offer the ability to pay in full, pay quarterly, or pay monthly. Many carriers are also starting to implement “pay-go” systems. With this option the employer reports wages, and then pays the commensurate premium. This option can avoid issues at audit time.

Workers Comp Alternatives

Guaranteed cost insurance works great for most of the small to mid-sized businesses our agency deals with. However, there are a few alternatives, that can be attractive when either the guaranteed cost markets are not available or pricing is too expensive.

  • Professional Employer Organizations (PEOs)
    • A PEO allows employers to outsource their employers. The PEO actually hires your employees and then provides not only Workers Comp benefits, but also employee benefits and payroll services.
  • Large Deductible Plans
    • With a large deductible plan, the insurer continues to provide first dollar losses to employees, but the insurer gets reimbursed up to the large deductible set by the employer. In Florida to qualify for a large deductible plan your standard workers’ comp premium must be over $500k. Under state guidelines, the minimum deductible is $100k.
  • Private Self-Insurance
    • Employers may self-insure all Workers Comp losses. To do so, the must prove to the Florida Self-Insurance Guaranty Association that they have the financial strength to make time payments of all current and future claims.
  • Group Captives
    • Group captives are usually only done for very large organizations. The captive is a privately held insurance company owned by a parent company. The captive, typically located outside the US, handles all claims and administration. One company to use such an arrangement is Disney.

How to Get Workers Comp Insurance

At Insurance Resources we have access to a number of national Workers’ Comp carriers. Our agents will work with you to determine the correct payroll and tailor a custom insurance solution for your business. Please call us at 727-345-0242, complete the below quote request, or email us at web@insuranceresourcesllc.com.

Most Common Claims

  • Slips or trip and falls
  • Repetitive motion injuries
  • Falling object injuries
  • Overexertion in lifting/lowering injuries
  • Falling from heights
  • Reaction injuries (i.e. chemical reactions)
  • Transportation injuries
  • Violent acts from other employees or animals
  • Fires or explosion injuries
  • Transportation related injuries
  • Machine entanglement injuries
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