Workers’ Comp: 9 Facts Every Florida Business Owner Should Know

As a small business owner, you’re constantly hearing about different types of insurance you might need. One of the most important, and legally required in Florida, is workers’ compensation insurance.

But what exactly is workers’ comp, and why do you need insurance for it? Let’s break down the basics so it’s easy to understand.

1. What is Workers’ Compensation Insurance?

Workers’ compensation, often called “workers’ comp,” is insurance that helps protect both your business and your employees if someone gets hurt or sick because of their job. It covers things like sprains, falls, or even accidental death.

As an employer, you’re responsible for keeping the workplace safe, but accidents can still happen. Workers’ comp makes sure injured employees get medical care and partial wages while they recover and can’t work.

2. What is Covered by Workers’ Compensation Insurance?

Workers’ compensation insurance provides essential protection for employees who are injured or become ill due to their job.

Here’s what it typically covers:

• Medical Expenses: Pays for necessary treatment related to a work injury or illness.

• Wage Replacement: Provides income if the employee misses more than seven days of work.

• Retraining Benefits: If the employee cannot return to their previous position due to permanent injuries, they may qualify for vocational retraining.

• Permanent Disability Benefits: If the employee cannot return to any job after the accident, they may be entitled to permanent benefits.

• Death Benefits: If an employee dies because of a work-related injury or illness, their dependents may receive funeral and death benefits.

3. Who is Required to Carry Workers’ Compensation Insurance in Florida? 

Workers’ compensation is mandatory in Florida. If your business doesn’t have it, you face serious penalties, including fines, lawsuits, jail time or even shutting down the company.

Coverage depends on your business industry and how many employees you have, including part-time, seasonal and remote workers.

• Construction Industry: Coverage is required if you have one or more employees, including owners.

• Non-Construction Industry: Coverage is required if you have four or more employees (full-time or part-time).

• Agriculture: Coverage is required for 6+ regular employees or 12+ seasonal employees meeting certain workday thresholds.

• Government: All state and local government employers must carry coverage.

• Out-of-State Employers: Must notify their carrier, list Florida on the policy, or obtain a Florida-approved policy.

Certain owners, partners, or officers may file exemptions, but for most businesses, coverage is mandatory.

4. How Can my Company Save Money on Florida Workers’ Compensation Insurance? 

There are several ways to reduce your premium:

1. Choose a Per-Claim Deductible:

• $2,500 Deductible (Not in Experience Rating): You pay the first $2,500 of each claim. This amount isn’t counted in your experience rating, which may lower future premiums.

  
  

• Deductibles from $500 to $2,500: You get a premium discount based on the deductible you choose. The insurer pays the claim and bills you up to the deductible. These claims do affect your experience rating.

2. Start a Workplace Safety Program (2% Discount)

3. Become a Drug-Free Workplace (5% Discount)

4. Keep a Good Safety Record: Your premium is affected by your experience rating, which compares your claims to others in your industry. Fewer claims = lower rating = lower cost.

5. Construction Employers – FCCPAP Credit:  If you're a large construction employer, you may qualify for the Florida Contracting Classification Premium Adjustment Program (FCCPAP).  Ask WCA for the application.

6. Add a Dividend Plan: You may get money back at the end of the policy year if you:

• Keep the policy active for 12 months

• Pay premiums on time

• Meet the minimum premium amount

• Have few or no claims (loss ratio under 40%)

5. How Are Premiums Calculated for Workers’ Compensation in Florida?

Workers’ compensation insurance premiums are calculated based on your industry classification code rate and payroll and are calculated using this basic formula:

     Payroll × Rate = Manual Premium

After the manual premium is calculated, various credits, surcharges, and adjustments are applied. Premiums for what are considered dangerous activities may be higher, and, if applicable, the claims history of the business relative to other businesses in the industry. An audit is conducted at the end of the year.  

The safer your workplace and the fewer claims you file, the lower your premiums will be over time.

6. How is Estimated Payroll Calculated for Workers’ Compensation in Florida?

When you buy workers’ compensation insurance in Florida, your premium (the amount you pay) is based mostly on your estimated payroll. Here's how it works in plain terms:

Step-by-Step Breakdown

1. Figure Out How Much You Pay Employees

   Start by estimating how much each employee will earn in a year.

   
   

   For example:

$18/hour × 40 hours/week × 52 weeks = $37,440 per year

2. Add Other Pay

Include things like:

• Overtime

• Bonuses

• Paid time off (vacation, sick days)

• Commissions

Don’t include tips or reimbursements.

3. Group Employees by Job Type

Each job has a class code based on how risky it is.

• Office workers = low risk = lower rate

• Roofers = high risk = higher rate

You’ll need to estimate payroll separately for each job type.

4. Apply the Rate for Each Job Type

Insurance companies charge a certain amount per $100 of payroll.

Example:

If the rate is $1.87 per $100 and payroll is $500,000:

500,000  X 1.87 = 9,350  

100  

That’s your base premium..

5. Adjust for Your Claims History (EMR)

    Your Experience Modifier (EMR) adjusts your premium based on your past claims:

• EMR < 1.0 = lower risk, lower premium

• EMR > 1.0 = higher risk, higher premium

This reflects your company’s claims history compared to industry averages.

Important to Know:

Payroll is estimated at the start of the policy term but audited at the end.

At the end of the year, the insurance company audits your actual payroll. If you paid more than expected, you might owe more. If you paid less, you might get money back.

7. What is a Workers' Compensation Insurance Audit and When is it Performed? 

A workers' comp audit is a review at the end of your policy term to compare your estimated payroll with your actual payroll and business operations.

An audit happens at the end of your yearly policy. Even if your policy is canceled early, either by you or the carrier, there is still an audit to determine the actual premium earned. 

Because your policy is based on estimated payroll, the audit compares those estimates with what you actually paid. It looks at:

• What kind of work your business does

• How much you paid employees

• Payments to temporary workers

• Payments to subcontractors without insurance

After the audit, your final premium is adjusted. If you overestimated payroll, you get a refund. If you underestimated, you’ll owe more.

8. What Are the Benefits of Using Work Comp Associates Instead of Dealing Directly with the Insurance Company?

Work Comp Associates is an independent agency, which means we work for you, not the insurance company.  We help you save money, stay compliant, and avoid costly mistakes.

Unlike dealing directly with an insurance company, we guide you through claims, audits, coverage options, and exemptions.

We specialize only in workers’ compensation, so we know Florida’s laws inside and out. Since 1984, we’ve helped businesses find the right coverage, classify employees correctly, and manage risk, all while keeping premiums low. If you’ve been denied coverage or need help with a safety program, we’re here to handle it for you so you can focus on running your business.

Here’s how we help:

• Understand Florida’s coverage laws: Our agents explain what coverage your business needs based on your industry, number of employees, and business structure.

• Find the best coverage at competitive rates: We compare multiple insurance carriers to find the right fit for your budget and risk profile.

• Offer personalized support: We help with safety program development, risk management strategies, and ongoing compliance.

• Ensure proper employee classification: Accurate classification prevents overpaying and reduces the risk of audit issues.

• Assist with audits and claims: We help you manage premium audits and workers’ comp claims efficiently, reducing delays and avoiding premium increases.

• Avoid costly penalties and missteps: Our agents help you stay compliant with state laws, preventing fines and legal issues.

• Help if you’ve been denied coverage: We walk you through the reapplication process, help gather documentation, and improve your risk profile to secure future coverage.

When we fix these issues, the savings go straight back into your business. We know your time and resources are limited, so we handle everything, from understanding complex coverage laws to managing claims and audits, so you can focus on running your business.

9. Will Getting a Workers’ Compensation Quote Take a Lot of My Time?

Not at all. Our agents only need a few key details from you to get started. Once we have that, we handle the rest, quickly and efficiently. We understand how busy you are, and we’re committed to making the review process as simple and hassle-free as possible for you and your team.

Work Comp Associates is an independent agency, which means we work for you, not the insurance company.  Contact us for a free quote. 

📞 Contact Information:

Phone: (561) 500-3592

Email: Mail@WorkCompAssociates.com

Hours: Monday–Friday, 9:00 AM – 12:00 Noon & 1:00 PM – 4:45 PM (Eastern Time)