Florida Workers’ Compensation FAQs
Who needs to obtain workers' compensation coverage?
In Florida, all businesses (except construction) with 4 or more employees, full-time or part-time. [Corporate officers count as employees unless the officer has applied for and been issued an exemption.]
All construction industry businesses, unless the business owners have exemptions and there are no employees. The owner is included unless he/she specifically files for an exemption. (Please see below for more details on exemptions.)
Who can get an exemption?
Only the owners of businesses are allowed to be exempt. Employees are never allowed to exempt out of workers’ compensation coverage.
- Construction Businesses: Exemptions in the construction industry cost $50 each and must be renewed every 2 years. Exemptions must be applied for online with the Division of Workers’ Compensation. >> Click here to apply for an exemption. <<
- Corporations: A corporation can exempt up to 3 of its officers. Each officer must own at least 10% of the corporation’s stock.
- LLC’s : An LLC can exempt up to 3 of its owners (called “managing members”) and each one must own at least 10% of the LLC.
- Sole Proprietors and Partners Sole proprietors and partners in the construction industry cannot exempt out of workers’ comp. Sole proprietors and partners must purchase workers’ comp coverage if they wish to remain working legally.
- Non-Construction Businesses: Exemptions for non-construction businesses are free and last a lifetime* or until they are revoked by the exemption holder. Business owners can get an exemption by filing form DWC 250 – Notice of Election to be Exempt. Exemptions must be applied for online with the Division of Workers’ Compensation. >> Click here to apply for an exemption. <<
- Corporations: Officers of a corporation are those people who own the corporation and hold an office on its Board of Directors. Non-construction businesses can exempt all of their officers – there is no limit to the number of exemptions. There is no charge for an exemption for a corporate officer whose company is not construction-related.
- LLC’s: Currently, there is no mechanism in the law for LLC owners of non-construction businesses to receive exemptions. It is up to individual insurance companies whether to include or exclude LLC owners from workers’ compensation coverage. However, effective July 1, 2013, owners of non-construction LLC’s will be considered employees unless they receive an exemption.
- Sole Proprietors and Partners: Sole proprietors and partners are automatically excluded from workers’ comp; they do not have to get an exemption. If they wish to be covered by workers’ compensation, they must file form DWC 251 – Election of Coverage with the Division of Workers’ Compensation. If they want to go back to being excluded from workers’ comp, they can file form DWC 251R – Revocation of Election of Coverage.
What is 1099 vs. W2 labor?
In general, standard WC carriers prefer insureds only employ W2 employees and limit their 1099 or sub-contractor exposure to insured subs and at a low %. The industry will generally accept 25-30% insured sub-exposure. Carriers want to avoid the use of uninsured subs, or employers who try to pay their “employees” on 1099. This is considered uncontrolled exposure. If, however, at the time of year-end audit, the insured is found to have uninsured subs, then they will be charged for the exposure. Typically, if the insured uses uninsured subs, they would then be canceled or non-renewed. There are a few carriers who will indeed consider a higher % of subs if the insured obtains certs on all subs. Typically these markets will want to see 3 years prior WC history and the payrolls for the governing class must supersede that of clerical and/or outside sales payroll.
PEOs (Professional Employer Organization) would only cover enrolled employees and never those paid on 1099 or cash. For more information on PEOs, watch our 2 min descriptive video: What is a PEO? AGENT version
Additionally, there are a few cases where independent contractors are paid on 1099 and exempt from having WC. An example would be Real Estate Agents. In these cases, the independent contractor is under a specific contract and a carrier may require a copy of this contract in order to not include them in the WC policy.
Lastly, in some very rare cases, some carriers may allow 1099 uninsured sub payroll as it is more universal to that industry such as home healthcare.
In summary, for most risks, uninsured subs are not permitted by carriers or PEOs and insured subs are generally accepted up to a reasonable % such as 25-30%.
Are terrorism charges for WC option? Can the charge be removed from a quote or policy?
No the charge is not optional, no it cannot be removed.
What is the Expense Constant on a WC policy and can it be removed?
The Expense Constant is a charge on every workers’ compensation policy and represents the common administrative expenses of issuing and administering a policy. In Florida, this is currently a flat rate of $200.00 – regardless of policy size. It is not subject to any premium modifications. This charge cannot be removed.
What is the Consent to Rate aka CTR in FL?
CTR is Consent to Rate. In FL since all of the WC rates are the same, a carrier can elect to quote a risk but only with added rate. The client can deny it of course, but if they want to bind it, they must consent, thus the consent to rate form which is required and filed with the state.
What is an Anniversary Rating Date (ARD)?
An ARD is the date which NCCI used to govern rate changes for a WC policy. However, Anniversary Rating Date (ARD) Rule Eliminated
The Florida Office of Insurance Regulation (OIR) has approved eliminating NCCI’s Anniversary Rating Date rule, effective May 1, 2017. The Anniversary Rating Date (ARD) rule was used only in workers’ compensation, and it provided the rules for applying rate changes, rules, and class codes to a given policy. For most workers’ compensation policies in Florida, the policy effective date and the ARD were the same date. However, there were situations where the policy effective date and the ARD were different dates, meaning more than one set of rates, rules and classifications could apply to a policy during a given policy period.
For example, under the ARD rule, if an employer’s workers’ compensation policy became effective January 1 but the policy had an ARD of July 1, any rate change would not be applied to the policy until the July 1st ARD. Two sets of rates would apply to the same policy in one policy period.
Because the ARD rule was confusing for policyholders, NCCI and OIR have agreed to eliminate the ARD rule effective May 1st for new and renewal policies. New policies written with an effective date of May 1, 2017 and after will no longer have an ARD that differs from their policy effective date. As existing policies come up for renewal starting May 1st , they will no longer have an ARD and will instead use their policy renewal date as the effective date. For both new and renewal policies, the rates, rules, and classifications in effect on the policy effective date will be applied to the policy for the entire policy period.
What is Employers' Liabilty on a Workers' Compensation policy?
Workers comp has two parts. Part 1 is Workers Compensation which covers the medical expense for an injury and if needed the indemnity (partial wages while out of work). Part 1 has no stated limits. Part 2 is Employers Liability which is separate coverage for liability for the owners of the company. Part 2 has standard or statutory limits of $100,000/$500,000/$100,000 (Each Accident/Disease-Policy Limit/ Disease-Each Employee) or they can elect to increase limits on part 2 to either $500,000/$500,000/$500,000 or $1,000,000/$1,000,000/$1,000,000.
For more information on Employers Liability see below:
How Employer’s Liability Coverage Works
Employer’s Liability Insurance usually covers all types of employer’s liability claims unless the policy specifically excludes them. However, some claims are more common than others. Employer’s Liability lawsuits typically involve one or more of the following four claims:
- Third party over actions. Another party that was held liable for your employee’s injury files this kind of lawsuit against your business. So say, for example, you own a small construction business. One of your employees was injured using a piece of machinery that you had not properly maintained. The employee sues the manufacturer of the equipment, and the manufacturer turns around and sues you for contributory negligence. (Note: in these cases, the employee can still collect Workers’ Comp benefits and file a lawsuit against the third party.)
- Loss of consortium. An injured employee’s spouse files this type of lawsuit. They sue your business because their spouse is no longer able to “engage” in marital relations after their work injury.
- Dual-capacity suits. An employee can file this type of lawsuit against their employer when a product the employer manufactures is the cause of their injury. That means you would be liable as both an employer and as a manufacturer.
- Consequential bodily injury. If your employee’s family members suffer bodily injuries as a consequence of the employee’s injury, they could sue your business. For example, say your roofer’s wife suffered an aneurysm from high blood pressure / stress after he fell off a roof and became paralyzed. She could sue you for medical damages.
When these claims happen, Employer’s Liability Insurance can cover your business’s…
- Legal defense fees.
- Damages or judgments.
- Other court costs.
You don’t pay extra for Employer’s Liability coverage unless increased limits is selected.
In Florida, who is requried to carry WC?
In general for FL, if they are in construction class, they must have WC if they have even one employee. For non-construction they would only be required to carry WC if they have 4 or more employees, even if they are all part-time. It is worth noting that WC pays first of all coverages and part one has no limits while part two employers’ liability does. Esp for lower-rated classes like doctors’ offices or other main street businesses, when they do not have 4 employees that would require the WC coverage to be in place, they are crazy not to have it since WC is one of the best protection for them as employers against litigation on workplace injuries. Lastly, if they have the required # of employees, they should be warned that in FL, the state regularly sends out deputies from the dept of insurance to fine or shut down businesses out of compliance.
Exemptions in FL must now be filed online: To file: Click Here
Is there a legal time limit carriers have to provide loss runs to an insured?
Yes, 15 days. (the below applies specifically to FL)
626.9202 Loss run statements for all lines of insurance.—
(1) As used in this section, the term:
(a) “Loss run statement” means a report that contains the policy number, the period of coverage, the number of claims, the paid losses on all claims, and the date of each loss. The term does not include supporting claim file documentation, including, but not limited to, copies of claim files, investigation reports, evaluation statements, insureds’ statements, and documents protected by a common law or statutory privilege. As applied to group health insurance, the term means a report that also contains the premiums paid, the number of insureds on a monthly basis, and the dependent status.
(b) “Provide” means to electronically send a document or to allow access through an electronic portal to view or generate a document.
(2) Notwithstanding any other law, an insurer shall provide to an insured within 15 calendar days after an individual or entity designated by the insurer receives the insured’s written request, either:
(a) A loss run statement; or
(b) For personal lines of insurance, information on how to obtain a loss run statement at no charge through a consumer reporting agency. However, this section does not prohibit an insured from requesting a loss run statement after receiving information from a consumer reporting agency, in which case the insurer shall then provide the loss run statement within 15 calendar days after the individual or entity designated by the insurer receives the insured’s subsequent written request.
The insurer is deemed to be in compliance with this subsection if the surplus lines agent provides the loss run statement on behalf of the insurer.
(3) At the time a loss run statement is provided to the insured, the insurer shall notify the agent of record that the loss run statement was provided to the insured.
(4) Except for group health insurance, a loss run statement provided pursuant to this section must contain a claims history with the insurer for the preceding 5 years or, if the claims history is less than 5 years, a complete claims history with the insurer. For purposes of group health insurance, a loss run statement provided pursuant to this section must contain a claims history with the insurer for the preceding 3 years or, if the claims history is less than 3 years, a complete claims history with the insurer.
(5) Notwithstanding any other provision of this section, an insurer is not required to provide loss reserve information.
(6) Notwithstanding any other law, an insurer may not charge any fee to prepare and provide annually one loss run statement in accordance with this section.
(7) This section does not apply to a life insurer as defined in s. 624.602.
(8) For group health insurance, only the group policyholder may request and be provided a loss run statement pursuant to this section.