The 411 on Workers’ Compensation Insurance

With costs high and supply chains hindered, you’re likely trying to cut corners wherever possible. After all, it’s your business at stake. But there are some areas you shouldn’t touch — and one of them is workers’ compensation insurance.

Workers’ compensation insurance protects both the employer and the employee. If an employee is injured or becomes ill on the job, medical costs associated with the injury and lost time from work will be covered. In return, the employer is protected from being sued for damages by the employee.

Who is required to have workers’ compensation insurance? 

In Florida, workers’ compensation insurance is required for all non-construction industry employers with four or more full- or part-time employees. (This is regardless of whether the employees work at a physical location or remotely.) That number decreases to just one employee for employers in the construction industry.

The State of Florida offers individual exemptions from the required coverage in certain circumstances. However, these exemptions are limited and you must apply for them.

If you have out-of-state locations, note that workers’ compensation insurance is mandatory in every state except Texas. Each state has its own requirements and stipulations; there are no federal guidelines.

What does workers’ compensation insurance cover?

When an employee is injured on the job, workers’ compensation insurance might cover doctor visits, drug prescriptions, physical therapy and additional care resulting from the injury. The employee could also qualify for partial wage replacement, short- or long-term disability, or death benefits. Benefits cannot be provided if the injury directly results from the employee’s drug or alcohol use at the time of the accident.

What is the cost of coverage?

The cost of your workers’ compensation insurance depends on the nature of your business, annual payroll and accident history. The state sets Florida’s workers’ compensation rates depending on the scope of work and the associated risk of injury. Jobs with a higher risk carry a higher rate.

That said, there are factors that can help reduce your overall premium.

  • An experience modifier can be assigned to an employer (depending on its size) after several years in business for excellent claims history.
  • Companies with high premium amounts (usually above $10,000 per year) are eligible for premium discounts.
  • Other premium credits are available for companies with a drug-free workplace or a formal safety program.

How can I get workers’ compensation insurance?

In Florida, businesses have several options to obtain coverage:

  • A workers’ compensation insurance carrier authorized by the Office of Insurance Regulations
  • An employee leasing arrangement with a professional employer organization (PEO) that has secured workers’ compensation coverage on behalf of its clients
  • Self-insurance (individual or commercial)
  • The Florida Workers’ Compensation Joint Underwriting Association (FWCJUA) — for employers that have been denied coverage by at least two carriers

If you have employees in other states, remember that each state has its own requirements for obtaining coverage. Some offer coverage through private carriers, others through state-funded programs (or both). Monopolistic states only allow coverage to be purchased from a government-funded program. There are also multi-state policy options. Be sure to review each state’s regulations before making any decisions.

Are there additional requirements for the Florida employer?

Yes. In addition to purchasing workers’ compensation insurance, Florida employers are required to:

  • Maintain the required records at all times and produce them when requested by the Division of Workers’ Compensation. Recordkeeping requirements are outlined in Fla. Stat. § 440.107 and Fla. Admin. Code Ann. r. 69L-6.015.
  • Display a notice stating the insurance carrier’s name, address, policy number and expiration date. It should also provide information on what to do if injured, how to contact Florida’s Division of Workers’ Compensation and the anti-fraud statement. Click here for a copy of the required notice.
  • Report all injuries that require medical attention to their insurance carrier within seven days of the incident. Employers can use the First Report of Injury form to notify the carrier and the injured employee. Any accident that results in death must also be reported to the Florida Division of Workers’ Compensation within 24 hours.

What are the consequences if we fail to comply? 

Operating in violation of workers’ compensation laws results in considerable costs to an organization. A stop work order could be issued requiring that all operations cease, resulting in lost productivity. Only once the company obtained coverage and paid the penalty could the organization resume. This penalty can be as much as two times the amount an employer would have paid in premiums.

Business owners who don’t obtain coverage, fail to report an injury, charge premiums to employees or terminate an employee for filing a claim could also face felony criminal charges. And failing to report an injury  (or missing the seven-day reporting window) could result in an  administrative fine of up to $2,000 per incident.

The bottom line… going without workers’ compensation insurance isn’t worth the risk. When you factor in potential fines and loss of business, it makes sense to have coverage. Contact a business insurance agent to answer specific questions regarding workers’ comp and your organization.

It’s also a good idea to work with an HR consultant experienced in workers’ compensation insurance issues. It’s not always clear what type of injury to report, whether you can hire someone else while an injured employee is out, or what return-to-work documentation must be provided. Human resources professionals are a key resource to answer these and other questions.


This article provides general information and should not be construed as specific legal, HR, financial, insurance, tax, or accounting advice. As with all legal or human resources matters, you should consult with your legal counsel and human resources professionals. 

JMCo shall not be liable for any direct, indirect, special, consequential, incidental, punitive, or exemplary damages in connection with the use by you or anyone of the information provided herein.