As a business owner in Florida, understanding workers compensation insurance cost is essential for ensuring compliance with state regulations and managing your business expenses. Florida law mandates that most businesses carry workers’ compensation insurance to cover employees who are injured at work, providing essential medical and wage replacement benefits, regardless of fault.
Who Must Have Workers Compensation Insurance in Florida?
In Florida, businesses with four or more employees, whether part-time or full-time, are generally required to have workers’ compensation insurance. However, construction businesses have more stringent requirements. They must cover all employees, even if there are fewer than four workers, and this includes contractors.
Small businesses may qualify for exemptions, but companies with $10 million or more in net worth can apply to self-insure. Self-insurance requires a $100,000 security deposit and proof that the business can meet the financial obligations of paying future claims, making this option rare for most businesses.
Why Is Workers Compensation Insurance Necessary?
Workers’ compensation insurance plays a crucial role in protecting both employers and employees. It ensures that injured workers receive necessary medical care and wage replacement, preventing financial strain due to workplace accidents. For employers, it provides protection from potential lawsuits related to work-related injuries.
The benefits of workers’ compensation include:
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Medical treatment: covering doctor visits, surgeries, prescriptions, and physical therapy
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Travel costs: for necessary medical treatments
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Disability benefits: offering temporary or permanent wage replacement
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Death benefits: paid to the family of workers who die due to a job-related injury
Employees who experience temporary disability typically receive two-thirds of their average weekly wage, within state-set limits. If the injury is permanent, the employee may be eligible for additional benefits.
Key Factors That Impact Workers Compensation Insurance Cost
Several factors determine the cost of workers compensation insurance in Florida:
1. Size of Your Workforce
The more employees your business has, the higher the cost of workers’ compensation insurance will be, as premiums are calculated based on total payroll.
2. Industry Risk
Industries with higher injury risks generally face higher premiums. For instance:
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Low-risk jobs (e.g., office workers): Typically $0.26 per $100 of payroll
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High-risk jobs (e.g., construction, manufacturing): Around $19.40 per $100 of payroll
The National Council on Compensation Insurance (NCCI) sets rates based on risk factors associated with different job classifications.
3. Claims History
If your business has a lower number of claims, you can expect a lower premium. Insurers reward businesses that maintain a safe workplace and demonstrate a history of fewer claims by offering them reduced rates.
4. NCCI-Determined Base Rates
Florida insurers must follow base rates established by the NCCI. However, businesses can lower their rates by participating in safety programs or offering drug-free workplace initiatives, among other risk-reducing measures.
What Is the Average Cost of Workers Compensation Insurance in Florida?
On average, businesses in Florida pay $1.30 per $100 of payroll for workers’ compensation insurance. However, the exact premium varies depending on the industry, the company’s risk profile, and claims history. Here’s a rough breakdown:
| Risk Level | Average Cost per $100 Payroll |
|---|---|
| Low-Risk Jobs | $0.26 |
| Standard Rate | $1.30 |
| High-Risk Jobs | $19.40 |
Are Florida’s Workers Compensation Premiums High?
While some insurers claim that premiums in Florida are high, Florida workers compensation premiums are relatively moderate when compared to other states. A 2018 study ranked Florida 21st in terms of average premiums. In fact, premiums have decreased in recent years, with drops in both 2018 and 2020.
The increases often blamed on claims frequency are generally due to the workplace safety practices in place. Businesses that fail to implement proper safety measures typically face higher premiums.
How Can You Lower Your Workers Compensation Insurance Cost?
To reduce your workers compensation insurance cost in Florida, consider these tips:
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Maintain a safe work environment to minimize accidents and injuries
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Provide regular safety training for employees
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Establish a drug-free workplace program
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Ensure proper employee classification based on their job duties
By understanding the factors influencing insurance costs, businesses can make informed decisions to reduce premiums while ensuring compliance. For more details, refer to the Florida Division of Workers’ Compensation or seek advice from a workers’ compensation lawyer