When was the last time you reviewed your workers’ compensation coverage?
For many Florida business owners, workers’ compensation insurance is something they purchase when they start the business and then renew year after year. As long as the policy remains active, it can be easy to assume that everything is still in order.
But your business may have changed since your current policy was originally written.
Your payroll may be higher or lower. Employees may have taken on different responsibilities. You may have added new positions, expanded into new services, changed the way you pay employees, or started working in additional locations. Even changes that seem unrelated to insurance can affect how your workers’ compensation program should be evaluated.
That is why a periodic worker’s comp quote, and coverage review can be an important part of managing your business.
For Florida employers, reviewing workers’ compensation is not simply about looking for a lower premium. It is about making sure that the information being used to determine your coverage and premium accurately reflects your business operations.
Why Florida Business Owners Should Review Their Workers’ Compensation Coverage
Workers’ compensation requirements in Florida vary depending on factors such as the type of business, number of employees, and business structure.
For example, Florida generally requires workers’ compensation coverage for construction employers with one or more employees, while non-construction employers generally become subject to the requirement at four or more employees. Agricultural employers have different thresholds. There are also specific rules concerning corporate officers, LLC members, sole proprietors, partners, and out-of-state employers working in Florida. (FLDFS)
Because these requirements can depend on the circumstances of the business, a business owner should not assume that the policy purchased several years ago continues to reflect the company’s current situation.
A regular review can help answer important questions:
- Is the business properly classified?
- Is the estimated payroll accurate?
- Are employees assigned to appropriate classifications?
- Have the company’s operations changed?
- Has the number of employees changed?
- Has the business expanded into another type of work?
- Is the current payment arrangement appropriate?
- Should the business obtain a workers comp quote from another option?
- Is a traditional workers’ compensation policy still the best structure for the business, or should the owner evaluate a PEO or employee-leasing arrangement?
The goal is not simply to find the cheapest policy. The goal is to understand what the business is purchasing and whether the current arrangement continues to make sense.
What Determines the Cost of Workers’ Compensation Insurance?
One of the most important things a business owner should understand is that workers’ compensation premiums are not based on one number alone.
Florida’s Department of Financial Services explains that the cost of workers’ compensation insurance is based in part on estimated annual payroll and the rate associated with the type of work performed. An experience modification factor may also affect the premium based on an employer’s claims history. (FLDFS)
This makes the accuracy of your business information important.
A workers’ compensation review should generally consider information such as:
1. Estimated Payroll
Payroll is a significant component of workers’ compensation premium calculations.
If your actual payroll is substantially different from the estimate used when the policy was issued, it may be appropriate to update the information.
Business owners should review whether payroll projections still make sense based on:
- Current employee count
- Employee wages
- Expected hiring
- Employee turnover
- Seasonal changes
- Overtime
- Business growth
- Changes in operations
Florida’s workers’ compensation system guide specifically notes that employers should provide accurate information regarding estimated payroll and notify the insurance company when payroll or job duties change during the policy term.
2. Employee Classifications
Another important part of evaluating a workers’ compensation policy is reviewing employee classifications.
A classification is intended to reflect the type of work being performed by employees. Different classifications can have different rates, which is why the description of the company’s operations and employees’ duties matters.
NCCI explains that workers’ compensation classification systems group employers with similar types of business and similar exposures, and classification information is used in workers’ compensation ratemaking. (NCCI)
For example, a business may have employees performing different functions, including:
- Office or administrative work
- Sales
- Supervisory duties
- Field work
- Installation
- Construction
- Manufacturing
- Warehouse operations
- Delivery
- Specialized trade work
The important question is whether the classifications being reported accurately describe the actual work being performed.
This is one reason a workers comp quote should be based on accurate information rather than simply copying the information from an older policy.
3. Has Your Business Change
Business owners frequently make changes without realizing that those changes may warrant an insurance review.
Consider whether your company has:
- Added employees
- Reduced employees
- Added a new service
- Discontinued a service
- Started working on larger projects
- Added subcontractors
- Changed employee responsibilities
- Added another location
- Expanded into another state
- Changed ownership
- Changed its business structure
- Increased or decreased payroll
- Started using a different payroll system
If any of these circumstances apply, it may be time to review your workers’ compensation program.
A policy that was appropriate when the company had five employees may not necessarily be structured the same way when the company has twenty-five.
4. Your Payroll and Workers’ Compensation Should Work Together
Workers’ compensation and payroll are closely connected.
The payroll information used for your business should accurately reflect the employees and compensation associated with the appropriate classifications.
This is particularly important when a company experiences rapid growth.
For example, a business may begin the year expecting $500,000 in payroll but eventually reach $800,000 because of increased business. Alternatively, a company may project significant growth that never occurs.
Either situation can make a periodic review worthwhile.
The objective is to keep the insurance information aligned with the actual operation of the business.
Should You Get a New Workers Comp Quote?
A business owner does not necessarily need to wait until the current workers’ compensation policy expires to begin evaluating options.
A workers comp quote can provide useful information when you’re trying to understand whether your current program remains competitive and appropriate for your business.
A comparison may consider more than the premium.
You may want to compare:
- Estimated payroll
- Employee classifications
- Coverage structure
- Carrier
- Payment options
- Experience modification
- Administrative requirements
- Certificate requirements
- Payroll integration
- Audit procedures
- Available discounts or premium programs
- Whether a PEO or employee-leasing arrangement should be considered
Florida employers can obtain workers’ compensation coverage through private insurance carriers licensed by the state. Florida also recognizes employee-leasing arrangements in which a licensed employee-leasing company provides workers’ compensation coverage for employees leased to the client company.
That means business owners may have more than one structure to evaluate depending on their circumstances.
Workers’ Compensation Is About More Than Finding the Lowest Price
It can be tempting to compare workers’ compensation policies based solely on premium.
However, the lowest initial quote is not necessarily the only factor a business owner should consider.
A proper comparison should look at the overall program.
For example, two proposals could have different pricing structures or administrative requirements. A business owner should understand what is included, how payroll is handled, how payments are made, and what information will be required throughout the policy period.
The objective should be to find a workers’ compensation arrangement that is appropriate for the company’s operations and business needs.
What About a PEO?
Some Florida businesses may also want to evaluate a Professional Employer Organization (PEO) or employee-leasing arrangement.
A PEO arrangement can combine certain employer administrative functions with payroll and workers’ compensation services.
According to the Florida Department of Financial Services, under an employee-leasing arrangement, the client company contracts with a licensed employee-leasing company. The client company maintains hiring, supervisory, and safety responsibilities, while the employee-leasing company pays the workers and provides workers’ compensation coverage for employees covered under the arrangement. (FLDFS)
For some businesses, this structure may be worth evaluating alongside a traditional workers’ compensation policy.
The right approach depends on the business’s circumstances, workforce, payroll, operations, and administrative needs.
A Florida Workers’ Comp Review Checklist
Before requesting a workers comp quote, gather the following information.
Business Information
- Legal business name
- Business address
- Type of business
- Years in operation
- Business structure
- Locations
- Description of operations
Employee Information
- Number of employees
- Employee positions
- Job duties
- Estimated annual payroll
- Number of full-time employees
- Number of part-time employees
- Owners, officers, or members
- Employees working in different classifications
Insurance Information
- Current workers’ compensation policy
- Current premium
- Policy expiration date
- Current classifications
- Experience modification information, when applicable
- Current carrier
- Recent payroll audit information
Payroll Information
- Current payroll reports
- Estimated annual payroll
- Payroll by employee classification
- Changes in payroll since the current policy began
Having accurate information available can make the quote and review process more efficient.
What Florida Contractors Should Know
Contractors should pay particular attention to workers’ compensation documentation.
Florida requires contractors to take certain steps to verify that subcontractors have the required workers’ compensation coverage before beginning work. The Florida Department of Financial Services notes that if a subcontractor does not have the required coverage for its employees, those workers can become the employees of the contractor for workers’ compensation purposes.
For contractors, this makes certificates of insurance and subcontractor documentation an important part of the overall insurance-management process.
A contractor should therefore evaluate not only its own workers’ compensation policy but also how workers’ compensation documentation is handled throughout its subcontractor network
Florida Workers’ Compensation and Accurate Information
Accurate information is important when applying for and maintaining workers’ compensation coverage.
Florida’s Department of Financial Services states that employers must report accurate information, including the type of work performed and estimated payroll for applicable classifications. (FLDFS)
Florida also takes compliance seriously. The state’s Division of Workers’ Compensation states that enforcement action can occur when an employer operates without required coverage or understates payroll or misrepresents employee duties for purposes of avoiding proper premium. (FLDFS)
For that reason, a workers’ compensation review should never be about attempting to manipulate classifications or payroll to obtain an artificially low premium.
The objective should be accurate information, appropriate coverage, and a clear understanding of the cost.
When Should a Business Request a Workers Comp Quote?
There are several situations when obtaining a new quote or conducting a policy review may make sense.
Consider requesting a review when:
Your policy is approaching renewal
Renewal is a natural time to compare your current arrangement with available alternatives.
Your payroll has changed
Significant payroll changes can affect your workers’ compensation premium.
You have hired new employees
New employees may change your payroll and classification information.
Your employees are performing different work
Changes in job duties or business operations may warrant a classification review.
Your business has expanded
New services, locations, projects, or markets can change your insurance needs.
Your current premium has increased
A premium increase is an appropriate reason to ask questions and understand what changed.
You have never compared your coverage
If you have been with the same carrier or arrangement for several years, a comparison can help you understand the current market options available to your business.
Don’t Wait Until Renewal to Understand Your Workers’ Compensation Costs
Many business owners wait until they receive a renewal notice before reviewing their workers’ compensation program.
Instead, consider making the review part of your regular business planning.
A proactive review gives you time to:
- Gather payroll information
- Review employee classifications
- Identify operational changes
- Compare available options
- Evaluate payment arrangements
- Review PEO or employee-leasing options when appropriate
- Prepare for renewal
- Make informed decisions about your insurance program
The earlier you begin, the more time you have to evaluate your options.
Request a Florida Workers Comp Quote and Coverage Review
Your workers’ compensation policy should reflect your business as it operates today—not necessarily the business you operated several years ago.
If your payroll, employees, job duties, services, or business operations have changed, it may be time to review your current workers’ compensation arrangement.
A workers comp quote can be a useful starting point for understanding your current costs and comparing available options.
At Ireti Workers Compensation, we help Florida business owners evaluate their workers’ compensation and payroll needs so they can better understand their options.
Whether you are looking for a new policy, comparing your current coverage, reviewing payroll information, or considering a PEO arrangement, the first step is to understand your current situation.
Request Your Workers Comp Quote
Have your workers’ compensation coverage reviewed today.
Complete our short quote and review form to provide basic information about your business, payroll, and employees.
A review does not have to mean changing your current coverage. It can simply provide you with a better understanding of what you currently have, what it costs, and what alternatives may be available.
Ireti Workers Compensation
125 NW 11th Ave
Dania Beach, FL 33004
Insurance requirements, classifications, premiums, and available programs vary based on the employer, industry, location, payroll, operations, and other factors. This article is provided for general educational purposes and should not be considered legal or insurance advice.