Did you know that the average cost of workers’ compensation insurance in Florida is $1.27 per $100 in wages? In Florida, workers’ comp insurance is mandatory, and the rates vary a great deal depending on your industry.
The National Council on Compensation Insurance (NCCI) has designated 700 kinds of work that determine the workers’ comp insurance rates for employees. The agency has researched the risks involved in each profession, and the higher risk codes need higher insurance coverage.
The least dangerous jobs are office and sales workers. The most dangerous jobs that need the most expensive insurance are natural resources workers, maintenance personnel, and construction workers.
Read on to learn about workers comp classification codes and how they affect your insurance rates.
How Are Premiums Determined?
The NCCI maintains the classification codes for each workplace danger. Insurance companies fund much of this agency, and insurance executives make up the majority of its board. Although individual states oversee their workers’ compensation laws, the NCCI creates the rules and manuals used in each state.
Employers may use more than one code on their policy. Company employees usually perform different types of work, so their combined hours determine the insurance rates.
For example, say a company employs ten construction workers and ten office workers. That employer would pay half of their insurance rate at the construction worker price and half the rate at the office worker price.
Employers then add the estimated yearly losses to average the cost. The rates account for normal conditions, per $100 of payroll. Employers must also add in an “experience modifier,” which adds or subtracts from the price depending on previous claims.
Florida businesses may also lower their costs by applying “premium credits,” which are the Safety Workplace Credit, the Drug-Free Credit, and the Florida Contracting Classification Premium Adjustment Program, or FCCPAP.
Employers assess their eligibility for the Safety Workplace Credit and the Drug-Free Credit as follows:
The Drug-Free Workplace Credit Program
This discount is 5 percent off the total workers’ comp premium. Below is an overview of the requirements for this credit. Businesses must have a full drug-free workplace program to qualify for this discount. These programs include:
- A statement on company drug policy
- The kinds of drug testing, including pre-employment, routine, post workplace injury, and reasonable suspicion
- Disciplinary action for a positive drug test
- A confidentiality statement
- Specific information about prescription drugs, employee rights, and procedures for non-compliance
- Accurate record-keeping and employee education
The Safety Workplace Credit
This discount is 2 percent off the total workers’ comp premium. Below is an overview of Safety Workplace requirements. A company must create a workplace safety program to qualify for this credit that consists of:
- A written safety policy
- First aid
- Preventative maintenance
- Accident investigation
- Safety inspections
- Safety rules
- Safety training
The company applies for this credit every year. If the insurer has mandated a safety program, and the company fails to create one, the business may be subject to a 10 percent premium increase, although it is more likely that the insurer will cancel the policy.
Florida Contracting Classification Premium Adjustment Program
To qualify for this credit, construction companies must pay their employees more than the average state wage. The credit, worth 5-25 percent, relies on payroll numbers from the third quarter of the previous year.
The credit accounts for straight time only without overtime, and only construction workers’ pay counts. There are currently 83 classification codes for jobs that are eligible for this discount.
The Florida Premium Discount allows for a standard discount ranging from 10.9 to 14.4 percent, depending on the annual cost over $5k.
The state of Florida applies an expense constant of $200 per year to cover administrative costs, auditing, and recording. The insurer adds this fee at the end of all the other premium calculations.
Florida, Workers Comp, and Classifications
It’s important to remember that Florida has a unique database of classification codes, so use Florida’s codes to determine your costs and risks. Make sure that you are accurate in your choices because the consequences of an incorrect code can be severe.
If your insurance company audits your business or an employee suffers an injury that leads to an audit, your insurance carrier may discover that you did not classify your employees accurately. If this is the case, they have the right to bill your company retroactively for up to three years of the misclassified premium.
Incorrect classifications can also cause your insurer to drop you entirely. If you try to buy insurance from another company, you may be subject to higher premiums because of increased risk. The best way to keep your rates as low as possible is to build a good and trustworthy relationship with your insurer.
It’s also wise to make sure that the NCCI has not reclassified your employees. These changes happen every year, so consult their database or subscribe to their site to make sure you are up to date with your codes.
Choose Your Insurer Well
Once you are ready to go forth and find an insurance provider, make sure you choose carefully. Some insurers are happy to help you through the process of obtaining what you need for your business.
Remember that in Florida, workers comp is different than it is in other states, and you want to be safe and accurate with your estimates. Check out our workers’ compensation pageand give us a call. We can help you figure out your options and build you the best premiums for your company.