Florida Small Business Insurance: Workers' Compensation Rules by Industry, Construction Rules, Commercial Auto and What to Ask Your Agent

Florida doesn't require one insurance package for every small business. Workers' compensation is required for most non-construction employers with four or more employees, full-time or part-time, and for construction employers with one or more employees, according to the Florida Division of Workers' Compensation (opens in a new tab). Vehicles used for business need commercial auto coverage, and a personal auto policy may not cover business driving, according to the Florida Department of Financial Services' small business guide (opens in a new tab). General liability, professional liability, property coverage and a business owners policy usually become required through a lease, a customer contract, a lender or a licensing authority rather than state law.

When does Florida require workers' compensation?

Florida's rule turns on your industry and your headcount. Fla. Stat. § 440.02 (opens in a new tab) covers private employment with four or more employees, or one or more employees in the construction industry. The Division of Workers' Compensation sets out the thresholds this way:

• Non-construction: four or more employees, full-time or part-time, according to the Division's employer coverage page (opens in a new tab).
• Construction: one or more employees, for the trades listed in Rule 69L-6.021, F.A.C.
• Agriculture: six regular employees, or 12 seasonal workers who work more than 30 days in a season or more than 45 days in a calendar year.

Owners count in specific ways. In a non-construction business, sole proprietors and partners aren't employees unless they elect coverage by filing Form DWC-251, while corporate officers and LLC members count toward the four-employee threshold, according to the Division (opens in a new tab). In construction, an owner who is a corporate officer or LLC member counts as an employee and must be covered.

An eligible officer or LLC member can opt out with an exemption. The exemption belongs to the person, not the business, and it's filed with the Division as a Notice of Election to Be Exempt under Fla. Stat. § 440.05 (opens in a new tab). An exempt officer isn't treated as an employee and can't collect workers' compensation benefits, as the Division's exemptions page (opens in a new tab) explains. Seasonal workers and family members are judged under the statutory definitions and the facts of the job, so ask the Division or your agent to classify a specific worker before you rely on a label. Our article on whether you need workers' comp for one employee covers the question nationally.

What changes for construction businesses and subcontractors?

Construction is where the rules are strictest. A contractor and subcontractor's employees on the same contract work are treated as employed in one business, and the contractor is liable for workers' compensation for the subcontractor's employees unless the subcontractor has secured its own coverage, under Fla. Stat. § 440.10 (opens in a new tab). The same section requires every contractor or subcontractor doing construction in Florida to secure and maintain coverage for its employees in the ways Fla. Stat. § 440.38 (opens in a new tab) provides.

In practice, a general contractor should collect proof of each subcontractor's coverage, or a valid exemption, before work starts. The Division's Proof of Coverage Database, Construction Policy Tracking and Exemption Search tools let you check what has been reported, from the coverage requirements page (opens in a new tab).

Calling a worker an independent contractor doesn't settle the question. If an employer fails to secure compensation, the Department assesses a penalty of up to $5,000 for each worker the employer classified as an independent contractor who doesn't meet the criteria in § 440.02, under Fla. Stat. § 440.10 (opens in a new tab).

What happens if an employer has no required coverage?

The Division can issue a stop-work order that shuts down business operations until the employer comes into compliance and pays the penalty, according to its enforcement page (opens in a new tab). Under Fla. Stat. § 440.107 (opens in a new tab), the penalty equals 2 times the premium the employer would have paid at approved manual rates for the uncovered periods within the preceding 12 months, or $1,000, whichever is greater. The lookback grows to 24 months for an employer that materially understated or concealed payroll or has received a stop-work order or penalty assessment before. Operating in violation of a stop-work order adds $1,000 a day.

Understated payroll and misrepresented employee duties can also lead to a stop-work order. Keep accurate payroll records by job classification, and update your agent when your workforce or operations change.

What commercial auto rules apply?

Commercial auto coverage applies to vehicles operated for business, and the required coverage and limits can depend on the vehicle's gross weight and use, according to the DFS small business guide (opens in a new tab). If you use your personal car for business, you may not be covered, because insurers treat business use differently. Review that use with the agent who handles your personal policy.

Heavier commercial vehicles need added liability coverage. Under Fla. Stat. § 627.7415 (opens in a new tab), commercial motor vehicles on Florida roads must carry combined bodily injury and property damage liability of at least:

• $50,000 per occurrence for a gross vehicle weight of 26,000 pounds or more but less than 35,000 pounds.
• $100,000 per occurrence for 35,000 pounds or more but less than 44,000 pounds.
• $300,000 per occurrence for 44,000 pounds or more.

Vehicles subject to federal Department of Transportation financial responsibility rules must meet those federal levels instead. These amounts are in addition to any other insurance the vehicle must carry. The Florida Department of Highway Safety and Motor Vehicles lists filing rules for business vehicles in its commercial motor vehicle requirements (opens in a new tab). Our articles on Florida car insurance requirements and whether you need commercial auto insurance cover the vehicle side in more detail.

What does a business owners policy cover?

A business owners policy (BOP) packages most of the commercial property and liability coverage a smaller business needs, for businesses such as stores, offices, restaurants and artisans, according to DFS (opens in a new tab). The NAIC describes a BOP as typically including property, business interruption and liability insurance in its small business guide (opens in a new tab).

A BOP doesn't include commercial auto or workers' compensation, and it usually leaves out professional liability, health and disability coverage. Eligibility depends on the insurer's rules for your type and size of business. Ask the agent to list what the BOP includes and which exposures need a separate policy.

How general liability differs from professional liability

General liability responds to claims that your business caused bodily injury or property damage to someone else, such as a customer who trips in your shop or a contractor who damages a client's floor. Professional liability, often called errors and omissions, responds to claims that your advice or professional service caused a financial loss, as the NAIC (opens in a new tab) explains.

A business with premises, products or job sites faces general liability exposure. A business that gives advice, designs, accounts, consults or provides technical or health services may face professional liability exposure. Many businesses face both. Our article on general liability vs professional liability insurance compares the two.

What landlords, customers, lenders and licensing boards may require

Workers' compensation and commercial auto may be the only coverage Florida law requires of many small businesses, but your city or county may add requirements, according to the DFS small business guide (opens in a new tab). Call the occupational license office in your city or county to ask. A license from the Department of Business and Professional Regulation or the Department of Agriculture may carry its own insurance requirement, so check with that board.

Contracts add more. A lease or customer contract may set a general liability limit, require you to name the other party as an additional insured or require a certificate before work begins. A lender may require property coverage and ask to be listed as a loss payee on collateral. The requirement comes from the document itself, so give your agent a copy.

What a certificate of insurance does and doesn't do

A certificate of insurance is proof of coverage that shows which insurer covers the risk, and it can't change the policy, according to DFS (opens in a new tab). Issuing a certificate that differs from the policy's terms is unlawful, and an altered certificate that misrepresents the policy violates Florida law. Agencies can't charge a fee for issuing certificates.

If a contract requires additional insured status, ask your agent whether the policy carries the endorsement that grants it. A certificate alone doesn't make someone an additional insured. Our article on the certificate of insurance for a small business explains how to request one.

How workers' compensation premiums are set

Florida workers' compensation rates are built from job classification codes and manual rates filed through the National Council on Compensation Insurance (NCCI). Florida has more than 500 employer classifications, and an employer's manual premium is multiplied by its experience modification, which compares its loss history with similar employers, according to an actuarial review published by the Florida Office of Insurance Regulation (opens in a new tab). A modification above 1.000 raises the premium, and one below 1.000 lowers it.

Employers that can't find coverage in the voluntary market may be placed in the residual market, which has its own rates and surcharges. Ask your agent which market a quote comes from. For classification questions, the Division's frequently asked questions (opens in a new tab) explain how to reach NCCI.

Premiums for every coverage depend on your business type, location, payroll, number of employees, limits, claims history and operations. Ask for quotes that spell out each coverage, limit and deductible so you can compare them line by line.

How to check an agent and file a complaint

Verify an agent or agency with the Florida insurance license lookup (opens in a new tab) before you sign or pay, as DFS (opens in a new tab) advises. For a dispute over a claim, premium, cancellation or misrepresented sale, contact the insurer or agent first and keep copies of every document. Then submit a request through the DFS Division of Consumer Services (opens in a new tab). DFS can look into the issue but doesn't act as your lawyer or adjuster.

Questions to ask your agent

• Which workers' compensation threshold applies to my industry, and do my part-time, seasonal, family or officer workers count?
• Is any officer or LLC member eligible for an exemption, and what benefits would that person give up?
• How should I check a subcontractor's coverage before work begins?
• What payroll and classification records will the insurer audit?
• Does any vehicle meet Florida's commercial motor vehicle weight thresholds?
• Does business use of my personal vehicle need an endorsement or a commercial policy?
• Does my lease or customer contract require a specific limit or an additional insured endorsement?
• What does this BOP include, and what needs a separate policy?
• Do I need general liability, professional liability or both?
• How does my experience modification affect my workers' compensation price?
• Is this quote from the voluntary market or the residual market?
• What will my certificate of insurance show?
• Are the agent and the insurer licensed and authorized in Florida?

When you're ready to talk with someone, Riskado's directory lists insurance agencies across the US, including Florida, by city and by category.

Frequently asked questions

Does a sole proprietor with no employees need workers' compensation in Florida?

In a non-construction business, a sole proprietor isn't counted as an employee unless they elect coverage by filing Form DWC-251, according to the Division of Workers' Compensation (opens in a new tab). Construction rules differ, so a construction owner should confirm their status with the Division.

Is there a daily penalty for ignoring a stop-work order?

Yes. The Department assesses $1,000 for each day an employer keeps operating in violation of a stop-work order, under Fla. Stat. § 440.107 (opens in a new tab). That's on top of the premium-based penalty.

Can my agency charge me for a certificate of insurance?

No. Fees for issuing certificates aren't among the charges Florida allows agencies to collect, according to DFS (opens in a new tab).

Do federal rules apply to my truck?

They can. Vehicles subject to the U.S. Department of Transportation's financial responsibility rules must carry the federal minimums, under Fla. Stat. § 627.7415 (opens in a new tab). Interstate trucking is a common example, as the DFS small business guide notes.

A short checklist before you call

Note your industry, headcount and each worker's role, list every vehicle with its weight and use, and gather your lease, customer contracts and lender requirements. Bring payroll, revenue and claims history to the conversation, ask for the policy forms and endorsements as well as the quote, and keep current certificates on file for every subcontractor.