If you're a business owner in Florida, understanding workers compensation insurance cost is crucial for compliance and budgeting.
Who Needs Workers Compensation Insurance in Florida?
In Florida, businesses with four or more employees, whether part-time or full-time, are legally required to have workers' compensation insurance. However, construction companies must cover all employees, including contractors, regardless of the number of workers they employ.
Certain small businesses may be exempt, but larger companies with a net worth of $10 million or more can apply to self-insure. To qualify for self-insurance, a company must meet strict financial requirements, including a $100,000 security deposit.
Why Is Workers Compensation Insurance Necessary?
Workers’ compensation insurance is essential for protecting both employees and employers. For employees, it guarantees that they will receive medical treatment and financial support if injured on the job. For employers, it reduces the risk of lawsuits resulting from workplace injuries.
Here’s a breakdown of the benefits:
Medical treatment: covering doctor visits, surgeries, therapy, and medications
Disability benefits: offering wage replacement for temporarily or permanently disabled employees
Death benefits: providing compensation to the families of employees who die due to work-related injuries
Employees who are temporarily disabled typically receive two-thirds of their regular wages, within state limits. Those with permanent disabilities may qualify for additional compensation.
Factors Affecting Workers Compensation Insurance Cost
The cost of workers compensation insurance in Florida varies based on several key factors:
1. Employee Count
The number of employees your business has is one of the most significant factors in determining your premium. The more employees you have, the higher your premium will be, as workers' compensation is calculated based on total payroll.
2. Industry Risk
Industries with higher risks of injury tend to have higher premiums. For example:
Low-risk jobs (like office work): May cost as little as $0.26 per $100 of payroll
High-risk jobs (such as construction or manufacturing): Can cost as much as $19.40 per $100 of payroll
The National Council on Compensation Insurance (NCCI) sets the rates, classifying jobs based on risk levels.
3. Claims History
Your business’s claims history plays a major role in determining your premium. Businesses with fewer claims are seen as less risky and typically pay lower premiums. By maintaining a safer work environment, companies can keep their rates down.
4. Base Rates from NCCI
Florida insurers must follow base rates set by the NCCI. However, businesses can lower their premiums by implementing workplace safety programs, drug-free workplace policies, and other risk management strategies.
Average Workers Compensation Insurance Cost in Florida
The average workers compensation insurance cost in Florida is about $1.30 per $100 of payroll. However, this can vary depending on the risk level of the job, number of employees, and claims history. Here’s an overview of typical premiums:
| Risk Level | Cost per $100 Payroll |
|---|---|
| Low-Risk Jobs | $0.26 |
| Standard Rate | $1.30 |
| High-Risk Jobs | $19.40 |
Are Workers Compensation Premiums High in Florida?
While insurance companies often claim that Florida premiums are too high, Florida’s workers compensation insurance premiums are actually relatively moderate compared to other states. A 2018 study ranked Florida 21st for average premiums in the U.S., and the rates have decreased in recent years, including in 2018 and 2020.
Premium increases are usually attributed to claims frequency. However, businesses that fail to implement safety measures may experience higher premiums.
How to Lower Your Workers Compensation Insurance Cost
To reduce your workers compensation insurance cost in Florida, here are a few strategies to consider:
Foster a safe work environment to minimize accidents
Provide safety training for your employees regularly
Maintain a drug-free workplace
Ensure your employees are classified correctly based on their job duties
By understanding how premiums are calculated, businesses can effectively manage their workers compensation insurance cost while staying compliant with Florida law. For more information, consult the Florida Division of Workers' Compensation or seek advice from a workers' compensation attorney.
