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Bob Lancaster Insurance, serving Florida's insurance needs since 1964. Contact us today at 321-725-1620 - see what we can do for YOU and YOUR BUSINESS!

Wednesday, March 9, 2016

WORK COMP WEDNESDAY - A Contractor's Guide to Workers' Compensation

In Florida, businesses involved in the construction industry are subject to some different rules and regulations when it comes to workers' compensation coverage.  As a service to our insureds who are in the construction industry, Bob Lancaster has put together  this list of common questions and answers.

What kinds of business are classified as "construction"?  The Florida Division of Workers' Compensation publishes the official list of class codes the state considers to be in the construction industry.

What are the workers' comp requirements for a business in the construction industry?  If you are in the construction industry, Florida law requires you to have an active workers' comp policy OR a valid exemption from workers' comp.  If you have and exemption on yourself as an owner of the company and you have even one employee, you must also have a workers' comp policy to cover those employee(s).  Every person working on a construction site in Florida must be covered by a workers' comp policy or have a valid exemption, including individuals you may bring onto the jobsite for a short time "just to help out."

What's an exemption and how does it work?  An exemption excludes you as a business owner from having to buy workers' comp insurance for yourself, which means you are not eligible to receive workers' comp benefits if you are hurt on the job.  Exemptions are valid only for the person and the company name listed on the exemption.  In the construction industry, only individuals who own 10% or more of a corporation or limited liability company are eligible to receive an exemption.  Non-owner employees are not eligible for an exemption.

How can I obtain workers' comp or an exemption?  To inquire about workers' comp coverage you can contact out office at (321)725-1620.  To apply for an exemption from workers' comp coverage, go to the Division of Workers' Compensation's website at MyFloridaCFO.com/division/wc and click on the box that says "Apply for an exemption".  Construction-industry exemptions cost $50 and must be renewed every 2 years.

What if I hire a subcontractor?  Under Florida law, you are responsible for making sure all of your subs either have their own workers' comp policy or have a valid exemption from worker' comp.  If you discover that your sub is out of compliance with workers' comp requirements (i.e., their exemption has expired or their policy has been cancelled by their insurance company), you should insist that they correct the problem before you allow them back on the jobsite.  If you allow someone to work on the jobsite without proper coverage or a valid exemption, your insurance company will charge you the premium for them and your insurance may be cancelled.  You also expose yourself to potential fines from the Division of Workers' Compensation.

If your company has a workers' comp policy or a valid exemption from workers' comp?  If your sub has a workers's comp policy, you should first ask him for a Certificate of Insurance (COI) that will show the name of the insurance company issuing the policy, along with the policy number and the policy period.  You should read the COI carefully to make sure it shows workers' comp coverage and not just another line of insurance such as general liability.  If your sub has an exemption, you should ask for a copy of his exemption certificate and make sure it's current and has the proper business name on it.  It should also list when the exemption is set to expire (exemptions expire every 2 years).

However, you should not rely only on COIs or exemption cards from your subs.  Insurance policies can be cancelled mid-year if the premiums aren't paid, and exemptions expire every 2 years.  If this happens to one of your subs, you will be at risk.

The best way to protect yourself is to independently verify the information you get from your subs by using two free databases maintained by the State of Florida.  The first database is the Proof of Coverage database; it lists all businesses in Florida who have a workers' comp insurance policy, as well as all individuals who have an exemption.  You can search by employer name, Federal Employer Identification Number (FEIN), policy number or the exemption holder's social security number.  You will be able to see the policy information for your subcontractor, including when the policy expires, and the governing class code being reported for the policy.  For your subs with exemptions, you will be able to see proof of their exemption and when it is set to expire.

The second database is the Florida Construction Policy Tracking Database.  By entering the information for all your subcontractors, you can track your subs' policies and/or exemptions.  If you sign up, the database will send you an email if a policy is cancelled or if an exemption expires, so that you can stop using that sub until they get the proper coverage.

To access these databases, go to MyFloridaCFO.com/division/wc and click on "Databases."  Then either click on "Proof of Coverage Database" or "Construction Policy Tracking Database."

Why is it important that I file my company's Annual Report with the State of Florida every year?  Corporation and LLC's must file and Annual Report with the State of Florida before May 1st of every year.  Companies that do not file their Annual Report are administratively dissolved by the state, and their owners can have their workers' comp exemptions taken away.  Go to the Secretary of State's website at Sunbiz.org for more information.

What are the requirements for out-of-state construction businesses doing work in Florida?  An out-of-state construction business doing work in Florida  must either obtain either a Florida workers' comp policy or a Florida endorsement to their out-of-state policy to cover their operations in Florida.  Out-of-state companies cannot legally work in Florida without paying Florida workers' comp rates.

Contact us for all your Insurance needs! (321)725-1620 
Bob Lancaster Insurance

Serving Florida since 1964

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