Starting a business is complicated enough without having to deal with the insurance side of it (see our recent blog post here for more about starting a business). If you've made it all the way to the insurance part you are doing pretty well. Here are some things you may not know about getting workers compensation insurance, what it is for, and how you could save some money.
There are two main categories of businesses to consider for workers comp in Florida, each with different rules.
1. Construction Industry
If you do one of these trades (below), you are considered in the construction industry for workers comp purposes. As a result, you are required to provide workers comp insurance from the beginning, whether you have employees or not. The state keeps track of businesses in this field and others, keeping a Proof of Coverage database that can be accessed by anyone. The owner of the business meeting certain criteria has a choice, if it's an LLC or Corporation, to exclude themselves from workers compensation. Here is where you go to fill out the online application and receive your Certificate of Election to be Exempt. It takes them a while to mail it to you, so plan ahead. If you don’t already have a Tax ID or FEIN, it will provide a link to the IRS website to complete that portion.
- Executive Supervisor
- Concrete Work
- Street or Road Maintenance
- Fence Erection
- Sign Installation
The full list of what is considered construction can be found here. I know this all sounds very invasive but it's probably for the greater good. By keeping out those who break the law, more work is left for those who run clean businesses. They are shouldering the expense to properly protect their employees from workplace injuries and should be rewarded. Abuse of this system is rampant so fines can be HEAVY and devastating, make sure you aren't a victim and call us today for a quote.
2. Non-Construction Industry
These guys get a bit of a break, with coverage not required until you have 3 employees. Business could be restaurants, realtors, property managers, retail, doctors' offices, and on and on to practically every type of business. Agriculture industry companies have it a little more complicated, with coverage required once they have 6 regular employees or 12 seasonal (30-45 days per year). Even though it may not be required for some businesses, it's still a good idea to have a policy and here's why.
Why get a workers compensation policy?
Health insurance won't cover workplace injuries for the owner of the business or its employees. I know of someone who badly cut his leg while clearing brush on a jobsite. After about 40 stitches, he gets a letter from his health insurance company saying the claim was denied because it happened while he was on the job. Even though it was unrelated to his work, he was on the clock and that puts the injury in work comp territory.
It's required as described above. You may get away with skirting the law for a while but apart from the fine it's possible to actually do jail time for evading workers comp laws. In a recent story from Florida's CFO, a business owner scammed 1.8 million worth of works comp premium and is facing up to 60 years in prison. Paying that much premium may really hurt but jail hurts worse.
If an employee gets hurt on the job, it's likely either their employer will pay for it (you can thank our abundance of lawyers for that) or the workers comp insurance policy will. It's pretty easy to tell which most people would prefer. Often the choice not to purchase insurance comes down to "as long as nothing bad happens, we'll be fine." The problem is things happen all the time and if you stay in business long enough, odds are it'll happen to you. Even if it's not required, it's important to protect the people who work hard every day and represent you and your business.
How much does it cost?
You could call 100 insurance agents and get pretty much the same price on workers comp from all of them. That's because the rate is standard, with the only deviations coming from individual providers fee and possible perks they provide. Yours will fall into one of hundreds of classes of businesses with a set percentage of payroll assigned for workers comp premium.
Rates change every year so it's hard to nail down, but administrative type employees are usually 1-5% and construction employees are usually 8-20%. For an up to date estimate, check with your workers comp insurance agent. How everyone should be classified I'll leave for another post.
There are credits for brave souls
If you're feeling brave and maybe pretty confident now, here are some extra steps to save you some money. There are three main things you can do to get that premium down (other than being claim free). It's not as easy as just filling out the application, the procedures must also be sent showing you have them written down and in place. It can take a bit of work but the savings can be substantial. We have helped other businesses navigate these credits and we'd be happy to help you!
Dividends - some companies offer to return a percentage of premium at the end of a policy term if the customer had little or no claims and meet certain criteria. These dividends range from 1-20% depending on the size of the policy and amount of claims. If you are paying more than $5000 a year for workers comp and not getting a dividend, give us a call and we'll be happy to take a look.
Drug Free Workplace - this one requires a little paperwork but offers up to a 5% credit on their premium. The application can be found here along with details on where to send it. Basically they are looking for a 3 part policy implemented by the employer:
- Testing Procedures are in place for new hires and employees
- Notice of Testing Policy given to Employees
- Education and resources available to employees
Safety Program - offers up to a 2% premium credit on a qualified program, the application can be found here. This one is looking for an employer that has implemented a 7 part safety program:
- Written Safety Policy and Rules
- Safety inspections
- Preventative maintenance
- Safety training
- First Aid
- Accident Investigation
- Record Keeping
Workers Compensation is unlike any other kind of insurance and its rules and laws can seem overwhelming. Don’t get bogged down trying to figure it all out on your own, give us a call and we will be happy to help you navigate. Even large, established businesses struggle with workers comp and many aren't aware or aren't getting the credits they deserve. For three generations, Norton Insurance has been helping businesses find the right insurance at the right price. Fill out our workers comp request form or contact us today!