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Workers’ compensation insurance is required in Florida for most businesses with four or more employees. Every business that does construction work — including contractors and self-employed workers — must have coverage.
It might sound like a good deal for your business of three or less to skip the cost of worker’s comp, but not having coverage also means that you could be held responsible for expenses if you or an employee gets hurt on the job.
If you consider the potential out-of-pocket expenses for an injury vs. the expense of having workers’ comp in Florida, you might find that it’s a worthwhile investment.
If you or an employee is injured on the job, a Florida workers’ comp policy can help pay for:
Workers’ comp could also be required in the city where you work or for certain business licenses and certifications. It’s not unusual for clients to ask for proof of coverage before signing a contract to work with you, as well.
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Florida law requires every construction business to carry workers’ comp for each employee, including contractors and self-employed workers. You can choose to exempt up to three corporate officers if it can be shown that they hold ownership of at least 10% of the company.
Contractors are also responsible for making sure that their subcontractors provide coverage for their workers.
Statistics from the Florida Division of Workers’ Compensation illustrate the importance of having an active policy for construction businesses. Figures show the average costs of claims in 2017, the most recent year data is available from the state:
Temporary disability claims: $19,727
Fatality claims: $73,874
Permanent benefits claims: $601,721
Because the agricultural work is often seasonal, Florida has special requirements for the industry. You must provide workers’ comp If you have a business with six or more regular employees or 12 or more seasonal employees who work for more than 30 days per year.
Almost every type of business in Florida — whether you have employees or not — can benefit from the financial protection offered by workers’ compensation insurance.
Because construction businesses typically have a greater risk of workplace injuries than other types of businesses, they are required to purchase coverage in Florida. A certificate of insurance is required to get a general contractor license in the state.
Professional services, consultants and other businesses with a lower risk of workplace injuries might also opt for coverage even though they are not required to have it. That’s because accidents that cause injuries can happen anywhere — even at desk jobs.
Many clients and professional organizations, regardless of the industry, might also ask you to provide a certificate of insurance for workers’ comp before they’ll do business with you.
Many business owners might believe that workers’ comp is only beneficial when you have employees. However, while it may be within the law to skip it as a sole proprietor, it can also benefit owners with no employees.
If you own a business as a fitness instructor, for example, and sustain an injury during a personal training session that will keep you out of work for a few weeks, workers’ compensation might cover your loss of income that month.
Some business owners, officers and members of an LLC business are eligible for a workers’ comp exemption. However, that would make them ineligible for coverage after a workplace accident.
Any lost wages or medical expenses would need to be paid out of pocket or through medical insurance.
In order to be considered exempt, the person needs to file an exemption application with the Florida Division of Workers’ Compensation.
Anywhere from 12,000 to 17,000 people file workers’ comp claims each year in Florida, according to data shared by the state [PDF].
Workers’ comp can help pay for expenses related to work-related injuries for employees and business owners. In the event of a work-related death, it can cover burial costs and other expenses up to the coverage limits.
Typically, workers’ compensation coverage can help pay for:
For example, you own a small plumbing business with a few employees. While on a job, an employee slips on a wet spot on the ground and hits their head hard on a sink. You want to make sure it’s not a serious injury, so the employee goes to the emergency room to check on possible head trauma. Workers’ compensation would help pay for emergency treatment expenses up to the policy limit.
Workers’ compensation does not cover incidents that are not job-related or situations when the injured person violates company policies, commits misconduct or uses drugs or alcohol.
Income benefits with workers’ compensation in Florida include one of three options with a maximum annual amount determined by the Florida Division of Workers’ Compensation:
Temporary total disability means a doctor has verified that the injured person cannot work because of a work-related injury. They can receive up to two-thirds of their average weekly wage for up to 104 weeks.
If a doctor assesses an injury will not improve significantly anymore, they can be eligible for permanent impairment disability. This means they could receive up to 75% of their temporary disability rate and benefits will be based on a doctor-assessed impairment rating.
Cases of permanent total disability occur when the person is permanently unable to work. Up to two-thirds of the person’s average weekly wage will be covered until they are 75 years old.
In the unfortunate event of an employee’s death, workers’ compensation provides 66.67% of the deceased worker’s average weekly wage to dependents, up to $150,000.
Failing to provide workers’ comp when required under Florida law can result in a stop-work order enforced by the Division of Workers’ Compensation. Stop-work orders happen about 2,500 times a year or an average of almost seven times a day, according to data provided by the state.
Any business that receives a stop-work order has to close until it is in compliance. In some cases, there could be a penalty of double the estimated workers’ comp insurance costs for two years.
If you are not required to provide workers’ comp based on Florida workers’ compensation laws, employees can still file a lawsuit to recover medical expenses or lost wages after a workplace injury.
For example, if one of your employees slips and breaks an ankle resulting in surgery, your workers’ compensation insurance could provide coverage. If you don’t have an active policy, your employee could take legal action and ask you to pay for medical expenses, resulting in significant long-term financial losses.
Because the risk of a job-related injury is greater for certain professions, workers’ compensation costs vary across industries. Factors that influence price include:
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Workers’ compensation insurance provides many important protections, but you’ll still need to include additional coverage with your business insurance package to make sure you are protected from all the risks you face every day.
Most Florida businesses also consider these options:
General liability insurance protects your business from common mistakes or accidents that can occur in your industry, such as customer injury or damages to someone’s property.
Professional liability insurance provides financial protection against claims of professional mistakes and negligence.
In Florida, all business-owned vehicles must be covered by commercial auto insurance. If you’re driving and using your personal vehicle for work-related purposes, commercial auto insurance also protects your business from unexpected expenses if you are involved in an accident.