Category: Workers Compensation Insurance

Should I Buy Workers Comp Insurance Online?

Should you buy workers comp insurance online?

Over the last 10 years or so, more and more insurance providers are starting to show up online. Additionally, even many traditional brick and mortar agencies are at least starting to have a website presence. There are many things to look for in a commercial insurance agent. Among the things that first come to mind are adequately protecting your business from risk of loss, providing well-priced insurance and providing good customer service/being available for customers. Online based insurance providers often perform well at many of the things that are important to insurance buyers, but do they provide the same service?

Online insurance providers are typically high volume agencies. That can benefit customers in a number of ways. First, many of these online providers have access to many different insurance carriers which can allow substantial price shopping. Additionally, due to having a high volume, these online providers generally have good relationships with numerous insurance carriers. Those relationships can often be leveraged to benefit clients when appropriate. Furthermore, due to volume, the online providers often have substantial experience and expertise in the coverages they are offering.

Another advantage of online insurance providers is that they tend to be consistently available during business hours. It is often the case that traditional agencies may be more involved in your community and you may not meet your online provider face to face. However, due to their business model, online providers are typically available in their office during most business hours, which generally allows customer needs to be met promptly. Additionally, online providers are typically licensed in all states, so they are generally set-up to help if out of state insurance needs arise.

With workers’ comp insurance, most of the benefits are determined by statute/laws in particular states. Thus, if a reputable carrier is used and information and business information is fully disclosed, most business owners should be able to be confident that their business is adequately protected by the insurance they purchase. With other lines of insurance, like general liability and professional liability, it is possibly more important to establish a level of trust with your insurance provider. It is important to make sure your business information is reviewed, so that coverage gaps can be analyzed to make sure your business is protected. Establishing this level of trust can often be done over the phone as well as it can be done in person.

Another thing to consider is that online insurance providers may be more closely aligned with the direction of the insurance industry. Many insurance carriers are continuing to develop more and more technology. Online insurance providers are generally also tech savvy. They focus on technology development and utilization. Online agencies may be better able to pass on carrier technology to their clients, while also providing their own technology to clients.  All of this is designed to make issues related to business insurance more efficient for you the business owner.

There are numerous reasons it may be beneficial to consider buying workers’ comp and other business insurance online. Prices are often very competitive. Online providers are generally available for customers and generally have substantial expertise in the insurance products they provide. Additionally, online providers are typically among the most tech savvy agencies in the industry, which is in line with marketplace trends and benefits customers. There are many things to consider in choosing an insurance provider, but online providers stack up well in many factors which are typically considered.

6 Questions to consider when purchasing Commercial Insurance.

What is the difference between Workers’ Compensation and Employers Liability Insurance when it comes to a commercial insurance policy?

First and foremost, Workers Comp is the one commercial insurance policy that is  required by law in most states. Workers comp covers injuries that happen to your employees that occur as a part of the normal business operations. It pays for medical costs and some lost wages. Typically, 60 percent of the wages are paid depending on the particular plan. Employers liability is a part within a work comp plan that that deals with most types of liability that are not associated with lost wages or medical costs. Most commonly this is the cost of a lawsuit. If you have an employee who is hurt on the job and they sue on top of their workers’ comp coverage for damage caused by you or your business these costs can be covered by an employer’s liability portion of a workers’ compensation insurance policy.

What is one type of insurance that many business owners turn down that they frequently regret when claims occur?

Business loss of income coverage is one that many fail to see the value of unfortunately until it is too late. The most basic example of the need for this coverage is when a fire occurs. The general liability or commercial property policy will cover the cost to rebuild your premise, but they will not pay for lost revenue and employee wages while your business is closed to rebuild. If a business cannot withstand several weeks or a few months without revenue this frequently is when they are forced to close altogether. Fortunately, this coverage is usually a part of a business owners package. When businesses by the package they usually are fully insured for these types of losses.

How does a well-documented safety program effect what I pay for a commercial insurance policy?

The main way safety programs can help is when you are asking for credits or discounts and when you are challenging your experience modifier after a claim. If you have had a claim and you have a well-documented safety program in place your agent can use this as evidence that the occurrence was an outlier and not a sign of more incidents to come.

How does my businesses claims history effect what I pay for Workers’ Compensation Insurance?

Your claims history is part of the formula insurance carriers use to come up with your experience modification rating. This rating determines how much of a risk your business is to insure and it is the main factor carriers take in to account when they are deciding to insure your business or not, as well as how much to charge your business in premium. This and the businesses workers comp codes are the main controllable factors insurance carriers use to determine premium rates.

When should I consider going with Pay as You Go Workers’ Compensation?

Seasonal or cash flow strapped companies benefit best from a Pay as You Go Program. This program allows you to pay a small portion of the premium up front and then the rest is due in monthly installments based on your monthly payroll. It helps to free up cash on the front end of the policy period and it prevents excessive audits on the back end of the policy period.

Where can I go to get help when a claim occurs on my businesses commercial insurance policy?

Actually your carrier is the best person to contact with a claim, but it is always a good idea to keep your agent in the loop as well. Your carrier is set up to handle and process the claim. Ask them for help with a return to work program if you do not already have one in place. Studies show the sooner the worker gets back to work in any capacity the more likely they are to return to work and the claim does not get out of control. Keeping your agent in the loop is great as well because they can go to bat for you in the event the carrier is not satisfying you or your employees needs during the claims process.

Construction Contracting risks for Workers Comp Quotes

Are Construction Contracting Risks hard to quote or impossible?

Working with artisan contractors for commercial insurance can be an exciting struggle. The benefit of working with companies that build or fix our homes and businesses every day is a rewarding challenge. That challenge can be tough to explain. Especially to someone who is just wanting to get their business quoted and move on with their day or with some one who has never experienced a claim. Below are some key things to consider when helping business owners search for commercial insurance.

FInd out just how difficult it is to get Workers Compensation Coverage for some contractors.

 

Why is contracting so hard to quote?

Contracting companies or Construction firms that perform building work represent some of the highest risk industries. They represent such a high risk because of the nature of work that is being performed. This means the potential for a claim to take place is high and the potential severity of that claim is also extremely high. Meaning the possibility of the claim taking place is high and when the claim happens there is a good chance it would be a severe and expensive claim.

What are the types of things that will cause a claim?

Construction and contracting see a variety of claims causes that make it a little scary for an insurance company. They are unique in that they have the ability to see virtually all types of claims you would see. Slip and falls, lifting strains, repetitive motion claims are ones any basic shop operation could have. Contractors also perform work outside of their shop, so motor vehicle accidents become a concern. Falls form heights can be one of the biggest concerns that can make a huge difference for most contractors wanting to get out of the state fund and with a competitive market carrier.

How can I set my firm apart from the rest?

As an Insurance Agent that specializes in hard to write workers comp, my approach when tasked with quoting a difficult scenario is to focus on the primary concern and risk. As a business owner, the first thing you want to look at is the biggest risk you have to your company which in turn will be the biggest risk to your workers comp carrier. The three biggest concerns being falls from heights, motor vehicle accidents and lifting exposures. This means any way you can limit the exposure or minimize the impact of these the better chance you have of getting quoted. Below are areas that you can look at:

As for height exposures: What is the maximum height in feet you work off ground level? The lower the number the better, but if you are doing work above ground level it is important that you know what the level is. Having a hard cut off point is important. Most importantly, how much opportunity do you have for work higher off the ground. If most of your productive work is less than 10 feet off the ground, but one small job a year is 25 or 30 feet off the ground, You may need to ask the business owner if it is worth paying more for insurance just to work this one job per year? Besides limiting operations, the business owner needs to comply with OSHA tie off requirements and they need to have strict protocols regarding work performed off ground level in their written safety program.

As for Motor vehicle accidents: Are you doing most of your construction work local or long distance? If working outside your local area, do you have multiple locations or crews based in different areas? This can sometimes be a way to limit having employees travel farther and limit your exposure. Besides limiting the travel area, check Motor Vehicle Records on all employees who will drive at time of hire and at least once per year. This is standard for most companies and your Commercial Auto Carrier is likely going to do this anyway. Reviewing and removing higher risk drivers from your driver list can help you with workers comp. Of course, it will save you money on your commercial auto policy ass well if you have one.

Prevent employees from becoming an injured worker by reading about the dangers of improper lifting at myinsurancequestion.comLifting exposures: Generally, are your employees lifting over 50lbs on their own? If so, find a different alternative to lifting like a dolly or something to assist in the lift. That can also be a mechanical hoist or a 2 wheeler to move heavy items.  It could also be requiring team lifting for objects over a certain weight. All of these strategies can limit this risk for your business. Safety programs are crucial to have in place for businesses dealing with heavy lifting. Accidents are eventually going to happen and when they do, a well-documented safety program can be the difference in being dropped for your carrier or not.

Working to improve these areas can help with many things for your construction business. Employees will see that you care for their well being, which in itself can be helpful in the quoting process. The safety protocols will help reduce your employees risk of a workplace injury and in most cases this can help the business get better, more aggressive quotes for workers comp insurance. I have seen in many states this savings can be over 50% for a carrier who has to go to the state fund vs the competitive market quotes. That’s like getting a half-off coupon for your workers comp.

What are Workers Compensation Credits and Debits?

When purchasing Worker’s Compensation Insurance there are two factors that can change your rate, credits and debits. There are credits, which help lower the price you pay, and then there are debits, which bring up the price you pay. There are a few things you need to understand in order to read a quote and declarations page with a little more confidence. This can help you as a business owner more confidently shop for workers’ comp coverage.

DEBITS

There are a few different reasons that you will find a credit and debit on your account. When a debit appears on your statement, the first has to do with whether or not the insurance carrier actually likes the aspect of the business they are writing. In other words, there are policies that carry greater risks for the insurance company. For example, carriers find it safer to cover a clerical worker than a HVAC contractor. One of the ways that a carrier will become more comfortable offering a quote is to add a debit, thus increasing the amount you pay to potential offset losses from injury.

Credits and Debits are an essential part of your workers compensation insurance policy. The biggest reason you will see a debit added is due to your businesses claims history. Some companies are better at managing injury and promoting safety. For example, companies with safety programs, return to work programs, and prompt reporting of claims generally have less claims than a company that never focuses on how to keep a safe environment for workers. Having these programs in place can help you obtain credits, which we will discuss shortly. Simply put the more claims you have the more you are going to pay in work comp premium.

Finally, another reason for debits has to do with the industry itself or the carrier that is on your policy. If the carrier is hurting from having to pay out a lot of claims all at once they may try to make up for the increased cost by assigning debits to certain classes of business.  The other factor is the insurance industry itself.  Depending how long you have been in business you may have been through the cycle of premiums going up and down. Multiple carriers and the amount of claims drive this across the entire workers’ compensation landscape.  This is common in a state like Florida after a hurricane hits or in the northeast after a year in which there was a lot of damage from winter storms.

CREDITS

Credits are a discount off your policy.  An example might be a 15% credit on a $1000 policy would take the annual premium down to $850. Most carriers can offer up to a 40% discount to qualified policyholders. The key to making sure that your business gets all of the credits it is entitled to is by making sure you have a strong safety program and a clean history of losses.

There are automatic discounts that you can see due to premium size as well. These are called premium credits or discounts. This is generally set up in a tier system, such as $0-$5,000 or $5,000-$10,000 etc.

The best way to get credits is to provide as a detailed description as possible about what your business does, but also give detailed examples of your safety programs. Showing how you go about keeping a safe and injury free work environment can go a long way to help you secure the largest credit for your business.

I hope this helps you understand just a little bit more about the declarations page when you are trying to determine the exact breakdown of your premium.  It’s not always about rates

Workers’ Compensation Insurance Limits

Workers’ Compensation Insurance comes in two parts, coverage A and coverage B.  Coverage B is technically called Employers’ Liability Insurance, but the 2 types of insurance are often generically referred to as workers comp insurance in common usage.  With respect to employees injured on the job, coverage A (Work Comp) provides unlimited coverage of all medical expenses, a set percentage of lost wages (which varies by state), a lump sum for disabling injuries as well as a disfigurement and death benefit.  Business owners often confuse the coverage that part B limits. This effects workers comp benefits, but workers comp benefits are established by the individual state’s statutes. They generally cover all medical expenses when they are implicated.  The limits on a policy only relate to employers’ liability claims.

Thus, it is important to know when employers’ liability limits could come into play.  As written about in a previous blog entry, the most common types of employers’ liability claims are as follows:

(1) Third party claims: these claims are generally brought about by an injured employee against a manufacturer of the object causing the employee’s injury. The manufacturer then brings a claim against the employer for contributory negligence.

(2) Dual capacity claims:  This is similar to the above, but it comes up when the employer is also a manufacturer.  If an employee is injured by a defective product manufactured by his or her employer, he or she might bring a product liability claim against the employer in addition to claiming workers’ compensation benefits.

(3) Loss of consortium or other services to family members: loss of consortium and other claims such as modifications to homes or lost parental services resulting from a workplace injury can be covered.

(4) Consequential bodily injury: claims by the spouse or other family members of an injured employee arising from the injury such as a heart attack due to the stress of the news of the employee injury.

(5) Intentional acts/torts by the employer: claims covered in some jurisdictions such as knowingly allowing employees to work in unsafe workplace conditions.

Employers’ liability claims are rare.  However, they can occur and are often costly when they occur.  Employers’ liability coverage can cover damages/judgments, settlements, legal defense fees and other court costs.  Increased employers’ liability limits generally only increase the cost of the workers’ compensation insurance policy by around 1%.  Statutory minimum limits are usually (in all but a couple states) $100,000 bodily injury by accident (each accident), $500,000 bodily injury by disease (policy limit), and $100,000 bodily injury by disease (per each employee).  These limits can also be increased to $500,000/$500,000/$500,000 or $1,000,000/$1,000,000/$1,000,000 in almost all cases as well as $2,000,000/$2,000,000/$2,000,000 is sometimes available.

Now that we have created a better understanding of why increased limits could come into play, what are the most common reasons for a business owner to need increased employers’ liability limits?  The most common reason to get increased limits is probably that they are required by a contract important to a business owner.  This is a common request, and it is the most common reason our agency sees for increased limits.  However, there are several other good reasons to use higher than statutory minimum limits. To include a workers’ comp and employers’ liability policy under most umbrella policies, the limits generally need to be at least $500,000/$500,000/$500,000 and sometimes as high $1,000,000/$1,000,000/$1,000,000 limits.  Another good reason to have increased limits is for businesses which are in industries that are more likely to have an employers’ liability claim arise.  Such industries are generally higher risk industries which are more likely to experience devastating claims or manufacturing industries.  Devastating claims are more likely to lead to loss of consortium or other services by family members type claims.  Additionally, manufacturers are most likely to risk claims from disease exposures or dual capacity products liability type claims from employees.  This should provide an understanding of when it is worthwhile to consider purchasing a slightly more expensive workers comp policy.

Workers’ Compensation provider of last resort. 3 ways states provide this service.

Workers’ Compensation Insurance is required coverage for businesses in nearly every state. It covers workers’ for some lost wages and medical costs due to injuries occurring on the job. It provides employers with the piece of mind that they will not be sued for injuries that occur as part of normal business operations. How to administer a system of workers’ compensation is left up to the individual states. Each state has their own way of going about administering this system. One major part of this system is how a state providers employers with a provider of last resort. This is also referred to as the state fund or the assigned risk provider.

Some employers who have had several incidents may be labeled as too much of a risk to insure. other employers are in a very risky industry like off-shore oil-drilling or coal mining. In these situations, insurance companies may deem the business too much of a risk to offer an insurance policy. When this is the case the state steps in and providers a provider of last resort. There are three main ways states go about administering a provider of last resort.

  • A State Fund
  • A Public-Private Partnership
  • Partner with NCCI

A State fund

One way states go about administering a provider of last resort is to have a government provided state fund. Utah and California are examples of two states who have state funded providers. These two states show how a strong or weak assigned risk provider can affect the rates employers pay for coverage. For example, The Workers’ Compensation Fund of Utah (WCF) has a 57 percent market share for work comp policies in the state. The next largest provider owns only a 3 percent share of the market (1). In comparison, The California State Compensation Insurance Fund (CSCIF) controls just over 11 percent of the market, compared to just under 10 percent for the next largest provider. As a result, Utah has workers comp rates that are 107 percent cheaper compared to California. This is not the only contributing factor to the discrepancy in prices, but it goes to show how drastic an effect a strong state fund can have. Now in California’s defense, the Gross Domestic Product (GDP) in Utah is nearly 1.7 trillion dollars less than California (2). That is another huge factor driving up prices in California.

A Public Private partnership.

Some states create a quasi-governmental partnership with a private insurance company to be the provider of last resort. This relationship allows the state and the insurance company partner to spread the risk between the two and still provide coverage to the employers of the state.

Colorado is an example of a strong public private partnership. The state fund provider for Colorado is the company Pinnacol. Pinnacol serves 56,000 businesses covering more than 900,000 workers in Colorado. Colorado employer’s enjoy rates on workers’ compensation insurance that are 19 percent less than the national average(3).

NCCI

Some states partner with an outside organization to administer the state fund. The National Council on Compensation Insurance (NCCI) is the organization most frequently used. NCCI is the nation’s most experienced provider of workers compensation information, tools, and services. In most cases they can administer the assigned risk more efficiently and cheaper than a state government can themselves. States who outsource this job to NCCI typically enjoy lower rates across the board.

Workers’ Compensation, Competitive State Funds

Each state has their own method for how they go about setting up a provider of last resort for workers’ compensation insurance coverage. This provider of last resort is also referred to as the assigned risk provider, the state fund or sometimes as the pool. This provider is designated as the provider of last resort for businesses who cannot find coverage through the open market. It is typically more expensive from this provider for a number of reasons.

Although, I have recently found there are a few state funds that are very competitive.  Some are so competitive my select carriers cannot compete with the rates being offered. I have a hand full of accounts that in the last few months I have tried to move out of the various state funds, but cannot find competitive rates.

Two of the states that I have had a hard time competing in are Texas and Kentucky. Both of these “competitive state funds” are really good at what they do. Offering Workers Compensation with both great rates and great safety resources for their insured’s. The clients I have tried to move out of these state funds are companies that do not fit in the underwriting box of our main street carriers. They still have opportunity to get coverage from a carrier that will offer pay as you go work comp and get out of the state fund. However the day has come when my current clients have said I am perfectly fine staying with the state fund. These carriers are offering dividends in some situations and are also offering an in network option. The in network option offers a network of Doctors that work with the carrier and streamline the process for workers’ compensation claims. This saves money for the employers and lowers the total pay out for a claim.

The state of Colorado also offers a “competitive state fund”. Three years ago I would have said my markets could still compete with these states in the voluntary market. Today I am not so sure. Don’t get me wrong it is still worth going through the process of getting quotes from all options. Depending on what classes of business the funds are doing really well in, you may be able to find better rates in the state fund. Much like the select carriers that are out there, the state fund will write most classes of business, but that does not mean they are going to offer their best pricing. For instance, take a Class Code 9014. This is for a commercial/industrial janitorial business in the state of Texas and this business has a substantial amount of payroll. The industrial cleaning portion of this company is going to kick them out of most of my select carrier underwriting guidelines. That leaves me with my high-risk carriers and my state fund (Texas Mutual). The high-risk carriers are usually going to have higher rates because they are offering to cover a business that not many carriers are willing to take the chance on. The high-risk carriers can only offer a 25% max credit. If the rates are not low enough to begin with we still are not going to be able to save the client money. On top of that we have the in network option and the dividend program. Many customers are benefiting by staying with the state fund of their home state.

The flip side to this is if we take the same Texas Janitorial Company and they decide to expand their operations outside the state of Texas. This would create a completely different scenario. State funds do have the ability to offer “other states” coverage’s on a separate writing paper or policy, but that is usually very limited to states and how much payroll will be allowed. In this case a high-risk carrier would be beneficial. The high-risk carrier will often times have the ability to add additional states to the policy as the company grows. They may also be able to offer better rates than the alternative, which would be having a policy with a handful of separate state fund policies.

Whether I am trying to move an existing client to a more competitive carrier or I have the opportunity to help a client that has come to me in need of a new policy. I have the tools and the ability to take care of the companies insurance needs. That can be through the state fund or through one of our many carriers.

What is the process for a Workers’ Compensation Payroll Audit?

The premium for most Workers Compensation Insurance Policies are based on a payroll “estimate” for the upcoming 12 month period from the effective date of the policy.  This is made as accurate as possible during the workers compensation payroll audit.  In addition, each business type is assigned one or more workers’ compensation classification codes. Each of the workers comp class codes are assigned a percentage rate factor. Payroll is than multiplied by the percentage rate factor for each class code. This is what determines the amount of the premium. After the policy period is complete, EVERY standard workers compensation carrier will perform a payroll audit for the previous 12 months of coverage.

During this payroll audit process the auditor can require either a physical or mail audit. Mail audits are fairly simple. They require completing a worksheet and submitting the requested payroll verification documents. Physical audits require the auditor to meet with the business owner, collect and verify payroll documentation and inspect the business to determine proper classification. Payroll documents usually include year-end tax reports, payroll ledgers and 1099 payroll information.

The purpose of an audit is to determine the “actual” wages paid to employees and to make sure the employees are classified correctly. After the payroll audit process is complete, the auditor reserves the right to change the workers compensation class code however they interpret the business based on their inspection. The auditor will report to the insurance carrier, the “actual” wages paid to employees and uninsured 1099’s per class code. The insurance carrier will than adjust the payroll figures and class codes. IF need be the auditor will than send the business owner a refund or an invoice for the additional amount due. If the business owner fails to complete the audit as requested it will cause difficulty purchasing a workers compensation policy in the future.

After the business owner receives the audit results, the business owner has the right to dispute the results if they feel something is incorrect. Business owners can go directly to the audit department to capture the auditor’s report/notes or business owners can involve their agent to assist with this process. If a classification code is changed and the business owner doesn’t agree the business owner must request an inspection by the appropriate state workers compensation bureau. Typically this request costs the business owner a few hundred dollars. The bureau inspection and classification code determination is final.

Should I Buy Workers’ Compensation Insurance?

 

This is a question that has been debated often in the Workers’ Compensation Insurance Industry. I think the best way to view this question is to break it down to an understandable level. Most Business owners’ biggest asset and achievement is their company. All of the blood, sweat, stress, and long hours that they have dedicated to this endeavor can be gone in a flash without insurance. A lot of the time it’s the cost of insurance that concerns owners. I never use it or I don’t need it is how business owner’s justify not carrying Workers’ Compensation Insurance Coverage. Why is it that we will insure our cars, home, and life but not our biggest asset? You may have the safest workplace in the world, but something could happen. That something could be just a fluke situation, but wouldn’t you rather have the protection of Insurance vs. the risk of covering out of pocket if something does happen. Below is an example for you to think about related to Workers’ Compensation Insurance:

 

Imagine you own a Law Firm. In your mind  your exposure to workers’ compensation insurance claims is minimal at best. Driving is an exposure that you may not think of that does exist for you and your business. Even though it does not happen very often it does exist. This could be driving to a different law office to pick up papers or meet for a mediation. You could be meeting with a client at their home of out of town. You could just be going down to the courthouse to file paperwork or go to trial. What happens if you or your legal assistance gets in an accident and is hurt. You tend to think that since it was an auto accident it should fall under auto insurance. What you don’t realize is that this employee was doing something in the scope of work and this is viewed as a workers comp incident. What if that employee can’t work anymore and they hire a lawyer. You don’t have work comp coverage so you could be directly responsible for paying claims out of pocket. If you have workers compensation in place, which for a law office is very affordable, then you could file this claim and be covered. You worked many years building your practice so why not protect it instead of leaving all your hard work and client development exposed to changing dramatically or ending completely over an incident that you could have taken care of with insurance.

 

Another quick example is a company that has about 5 employees and only Office exposure. This business doesn’t offer health insurance or work comp. The business owner thinks the business only has office staff. What’s the worse thing that can happen? Well in this scenario, Employee A is getting a glass of water from the dispenser and some water spills onto the floor unnoticed by the employee. Employee B later gets up to go send a fax. On their way Employee B slips and falls straight back and breaks their arm. If there is no insurance in place, the business owner is going to have to pay for this out of pocket. This will take money from the profitability of the company. The Cost of medical care for Employee B was around $20,000. Now if the same Business Owner had Workers’ Compensation Insurance Coverage, that probably based on exposure would have cost around $1,000 for the year, they could have saved $19,000. That is real money that makes a huge difference to business owners of any size.

 

There are many other examples we could go over from contractors to home health care to restaurants. You as a business owner may not think of the risk, but someone in your same business has either felt the pain of not having coverage or the relief of knowing that insurance is protecting what they have spent years building. Don’t leave your most treasured asset exposed. Consider the long-term benefits of insurance. It’s not a matter of if it will happen. It’s a matter of when it will happen.

Floridas Workers Comp Exemption Process in 20 Steps

The process for an owner of a company to get themselves properly excluded from a workers compensation insurance policy in Florida is quite cumbersome. In fact, owners not becoming properly excluded is one of the leading causes of workers’ compensation audit balances in the state of Florida. In Florida, an officer or LLC Member can only be excluded if they have a properly filed a Florida workers comp exemption form on file with the state. This can be done in two ways: 1) Complete a form by hand, get a notary signature, and mail the form to the proper Division of Workers Compensation office; or 2) Complete the online version of the form.

Florida workers comp exemption

The handwritten option is not overly reliable. Any errors on the form or if it is sent to the wrong office can cause the form to not be filed. In this circumstance the owner ends up getting included on the policy and will owe additional premium.  The online form is the best solution, even though the process is cumbersome and detailed. That’s why I’ve created this 20-step process for an insured to follow to make sure the officers are properly excluded.

Florida Workers Comp Exemption

1. Go to Sunbiz.org

2. Use the Document Searches Tab to find your Corporation or LLC. It is best to use the Tax ID

3. Make sure the business is in Active status. If not, correct this with the secretary of state before filing your exemption.

4. Your information inputted for your exemption must match Sunbiz. Therefore it is important to have this information handy.

5. For online filing use the link below. Otherwise use the paper form (input form number)

https//apps.fldfs.com/bocexempt/

6. Click the Apply for or Renew an Exemption button

7. Agree to Terms and Use a Pin to access in the future.

8. Section 1:

a. Applicant Name – Name of the person who is being excluded

b. Drivers License Number – select the correct state

c. Last 4 of Social

d. E-mail address – this is not required but helpful

9. Section 2:

a. Select Construction or Non-Construction

b. Select Either an Officer or Member of LLC

10. Section 3: Important to have your Sunbiz paperwork for this

a. Enter all information as listed on Sunbiz. Do Not Mis-Spell

b. Select a Scope of Business from the drop down menu. This is your main workers compensation class code with a 0 in front of the 4 digit code.

11. Section 4:

a. Input the document number listed on Sunbiz

12. Section 5

a. Either complete or check mark the “not applicable” box.

13. Section 7

a. Input other company info the applicant is an officer for

– This does NOT mean that the exemption is registered for each entity. You MUST enter the exemption information for EACH entity the owner is connected with. A separate application is required for each Tax Id.

14. Section 8

a. Verify this is correct

15. Section 9 –

a. Input workers compensation carrier name

16. Section 10

a. Input Name & Drivers License

17. Hit Continue

18. Hit Submit – there is a submit button after you hit continue

19. Processing Time – It generally takes 3-5 business days to process. Check back on the Florida Proof of Coverage website until it shows as registered.

20. If the Application is Rejected – Use the register website above, Click “Modify Application”, input your Pin and correct the problem. Best to contact the Florida Division of Workers Compensation and ask why the application was rejected so you know what to correct. 850-413-1609 option 2

Notes

Most exemptions are only active for 2 years. The exemption must be renewed by re-entering the information online.

Construction exemptions require a payment of $50

It’s very important to check back on the status of the exemption. Several times when registering for exemptions my clients have not received communication and the application didn’t process.

Spelling everything exactly like listed on Sunbiz is VERY IMPORTANT