Do Sole Proprietors Need Workers’ Comp Insurance in Florida?

As a Florida sole proprietor who owns and runs a one-man business, workers’ compensation insurance might not seem necessary. Adding coverage to your insurance policy might seem like a way to increase expenses without adding value. However, that’s not always the case. If you’re wondering whether you need workers’ comp insurance coverage as a sole proprietor, this blog is for you. We cover the requirements and benefits of having a workers’ compensation insurance policy for sole proprietors.

Are Sole Proprietors Required to Have Workers’ Comp?

Sole proprietors can get an exemption from workers’ comp coverage in Florida, given that they don’t have any employees. However, that doesn’t apply to sole proprietorship in the construction industry.

The construction industry is considered a dangerous, high-risk industry, and sole proprietors working in the construction industry are considered employees of the state. So, all people working in the construction industry, even the self-employed ones, are required to have workers’ comp insurance with or with no employees.

Sole proprietors who work in other non-construction industries aren’t required to have workers’ compensation unless they have four or more full-time or part-time employees.

What is the Sole Proprietorship Workers’ Comp Exemption?

Construction Industry

By Florida state laws, sole proprietors in the construction industry cannot file an exemption form. Only corporate officers and LLC members may apply for exemption, with some limitations. For example, they need to own at least 10% of the corporation or LLC.

Moreover, A maximum of three corporate officers or LLC members per company can be exempt. Exemptions are valid for two years only and should be renewed on time. Independent contractors in the construction industry are required to have workers’ compensation insurance unless they are eligible for exemption.

Other Industries

In non-construction industries, sole proprietors and partners are automatically exempt from carrying a workers’ comp policy, but they may elect to be covered if they wish. As for corporate officers and LLC members, they can file for exemption under some conditions, and it would be valid until revoked. Independent contractors in non-construction industries aren’t required to carry individual workers’ comp insurance.

What Are Workers’ Compensation Benefits For Sole Proprietors?

While sole proprietors are not required to have workers’ compensation coverage, they may still need it for their own safety. Here are some of the benefits of having workers’ compensation insurance.

Medical Expenses

Workers’ compensation insurance covers work-related injuries. If the business owner is injured while on the job, they are obligated to cover their medical costs.

Personal health insurance alone doesn’t cover work-related illnesses and injuries, in most cases. If you have workers’ compensation, it will cover medical bills, including hospital stays, doctor visits, surgery, physical therapy, and more.

Lost Wages

If the injury leaves the employee unable to workers’ comp insurance provides wage replacement or lost income, also known as disability benefits. There are four types of disabilities, which workers’ compensation insurance covers:

Temporary Total Disability (TTD): Paid when the worker is completely unable to work for a limited period.
Temporary Partial Disability (TPD): Paid when the worker can return to work part-time or in a limited capacity.
Permanent Total Disability (PTD): For employees who are permanently unable to work.
Permanent Partial Disability (PPD): For permanent impairments that do not completely prevent work.

In all these cases, workers’ compensation pays for a portion of the employee’s wage pre-injury. In the unfortunate event of the employee’s death, workers’ compensation insurance provides the dependents with wage replacement, up to $150,000 total, plus funeral expenses up to $7,500.

Vocational Rehabilitation

Rehabilitation is also one of the benefits of workers’ compensation insurance. If the employee is unable to return to their previous job because of their injury, they are provided training, counseling, and the help of job placement services.

Mileage Reimbursement

If the employee is required to travel for their medical appointments, workers’ comp reimburses them for their round-trip to the medical facility or pharmacy. Moreover, in case the injured employee can’t drive because of their injury, the insurance company is required to provide transportation.

How Much Does Workers’ Comp Insurance Cost for the Self-Employed?

The cost of having workers’ comp policy for sole proprietors differs from one person to another, based on factors like the industry and payroll. Even if you are the sole owner and operator of the business, the cost of workers’ comp is affected by your payroll and income.

Each industry has a code that decides how its rate is calculated. The rate is decided by the insurance carrier. For example, the rate for a doctor’s office may be as little as $0.25. To get the annual premium, you take the annual payroll, divide it by 100, and then multiply it by the given rate for the industry. If the annual income of the doctor is 45,000, this would be the formula: 45,000 ÷ 100 x 0.25 = $18 per year.

For a high-risk industry, like concrete construction, the rate is much higher, potentially up to $4.25. If the contractor gets the same income of $45,000. The formula would be 45,000 ÷ 100 x 4.25 = 1,912. As you can tell, the rate varies widely between industries to reflect the amount of risk.

How Can Florida Sole Proprietors Find Affordable Individual Workers’ Comp Insurance?

If they decide to get additional protection and elect to get covered by workers’ compensation insurance, self-employed professionals can get discounts instead of paying full price for the workers’ comp insurance policy. Here’s our top tips:

Shop around with multiple carriers. Not all insurance companies have the same rates for the same risk class. Compare quotes until you find one that suits your budget and needs.
Work with an insurance agent. They can help you find an affordable insurance provider. They can also bundle your commercial insurance policies, like commercial auto insurance or general liability insurance, to get a discounted rate. Moreover, they can make sure your classification and payroll are reported accurately.
Pay as you go. Many providers allow you to pay based on your actual payroll instead of estimates, which is helpful if your income fluctuates.
Implement Safety Programs. Some state-certified programs can lead to premium discounts.
Keep a Clean Insurance Record. Your claims history is considered when calculating your premium rate. A clean history can get you a discount, and previous claims may increase your premium.

Florida Insure provides comprehensive workers’ compensation insurance coverage for sole traders and small business owners. Explore our affordable options now.

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Frequently Asked Questions

Do I need workers’ comp in Florida if I have no employees?

No, unless you’re a sole proprietor in the construction industry, which requires coverage even with no employees.

Who is required to have workers’ compensation insurance in Florida?

Construction businesses with 1 or more employees (including the owner)
Non-construction businesses with 4 or more employees (including corporate officers)
Agricultural businesses with 6 or more regular or 12 or more seasonal employees

Are sole proprietors covered under workers’ compensation?

No, not automatically. Sole proprietors must elect coverage by filing Form DWC-251, unless in construction, where coverage is mandatory.

What wages are exempt from workers’ compensation?

Wages paid to properly exempt business owners, such as corporate officers or LLC members who filed exemptions, are not included in premium calculations or covered under workers’ comp.

Are sole proprietors exempt from workers’ comp in Florida?

Sole proprietors with no employees can get an exemption from workers’ comp insurance. That doesn’t apply to ones who work as contractors in the construction industry, as they are considered employees of that state.