The cost of Florida workers’ comp insurance can vary dramatically based on your payroll, line of work, safety record, and more.
Wondering what you’ll pay for workers’ compensation coverage in Florida? You can get more details on this page, or get a quote from WorkCompOne now!
Florida is a “base rate” state. This means that the state of Florida mandates initial insurance rates. Then, all insurers licensed to write workers’ comp in Florida must use the rates set by the state’s chosen rating agency, NCCI (National Council on Compensation Insurance).
This is important because it means there will be little variation between insurers if you’re price-shopping quotes. Private insurers do not have much flexibility to offer higher (or lower) rates compared to other states in the U.S.
For example, as of 2023, Florida mandated a workers’ comp insurance rate of $1.35 for Asphalt & Paving Work. Workers’ compensation insurance premiums are expressed per $100 of payroll. So you operate a paving company with $100,000 in payroll, you’d pay $1,350 for workers’ compensation insurance in Florida.
Overall, Florida has very competitive workers’ compensation rates, and rates continue to fall. The NCCI has recommended that rates be reduced by an additional 15% starting in 2024.
But rates are just one piece of calculating your workers’ comp premium. To know your true cost, you also need to factor in class code, payroll, credits and debits, Ex-Mod, and more. Let’s discuss these in detail now, and help you understand how much Florida workers’ compensation insurance costs.
Recommended Read: How to Get Workers’ Compensation Insurance in Florida
There are lots of different things that can affect how much you’ll pay for workers’ compensation insurance in Florida. Let’s discuss them one by one and go through the calculations that insurers will use to determine your premiums.
Most Florida employers must carry workers' compensation insurance in Florida if they employ four or more people. This includes full-time, part-time, temporary and seasonal employees, as well as corporate officers and Limited Liability Company (LLC) members. And there are two major exceptions:
If you have fewer than four employees, you are not legally mandated to carry a workers’ compensation insurance policy in Florida.
However, it may still be a good idea to get a policy. If you don’t have workers’ compensation insurance and an employee gets injured, they may be able to sue your business for lost wages, disability, damages, and more.
Different workers have different risks of injuries. For example, a construction worker is a lot more likely to get injured than a daycare worker. That’s where “classification codes” come in. These are codes assigned to employees based on their line of work.
If you have multiple employees performing different types of work at your business, they will all have different class codes – and these will determine the rates that you’ll pay for workers’ compensation insurance in Florida. Here are a few examples of class codes and workers’ comp premiums in Florida based on 2022 rates.
As you can see, different lines of work can lead to dramatically different insurance premiums for workers’ compensation in Florida. In general, physically demanding or accident-prone jobs have higher rates than office jobs.
That’s because the workers’ compensation rate are based on the type of work the employees do, and relative risk for injury associated with that work. If you have several employees performing different types of work, they’ll fall under different classification codes, and likely have different rates.
The number of employees you have may dictate whether you’re legally required to carry insurance in Florida. However, payroll is the most important thing when determining the cost of workers’ comp insurance in Florida.
Workers’ compensation is based on the actual wages you pay to your employees. So if you have four employees and a total payroll of $150,000, your payroll is the only thing that’s relevant when calculating the cost of your workers’ comp policy.
Also, workers’ compensation is based on gross payroll, meaning the total wages you pay before any taxes or deductions. You can get this information from your payroll company or payroll software.
Now that we understand the basics of class codes and payroll, we can move on and begin calculating Florida workers’ compensation insurance costs. The general calculation can be summed up as follows:
(Base Rate x Payroll x Experience Modifier) +/- Credits/Debits = Premium
That may seem a little bit complicated, but we can break it down with a simple example and show you exactly how workers’ comp rates are calculated.
The base rate is determined by a worker’s class code and is expressed per $100 in payroll. The base rate for an office worker (class code 8810) is $0.16 per $100, meaning that workers’ comp coverage for an office worker making $50,000 per year would cost $80.
You will need to calculate the base rate separately for each type of worker at your business, too. For example, if you run a plumbing company with four plumbers and an office worker, their base rates will be different. As mentioned, office workers have a base rate of just $0.16, while plumbers in Florida (class code 5183) have a much higher base rate of $3.70.
Workers’ compensation premiums are calculated based on gross annual payroll, rounded to the nearest thousand. If you’re unable to calculate the exact payroll for the year (for example, if a worker is paid hourly), you can estimate your projected payroll. Actual payrolls are reported as part of the annual audit.
If you’ve been in business for several years, you may have been assigned an Experience Modifier or “Ex-Mod” for short. Basically, this number is based on your history of workplace injuries. If you have a good safety record, your Ex-Mod will be lower, and you’ll get a discount on your insurance policy.
On the other hand, if you have had a lot of injuries and claims at your workplace, your Ex-Mod will be higher – and your workers’ compensation costs in Florida will be higher. Once your business has an Ex-Mod, it’s mandatory for insurance companies to use it when determining your premiums.
At the end of each policy year, your insurance company will reconcile your actual payroll figures with your yearly payroll estimate. If you overpaid for your workers’ compensation insurance in Florida, you will get a credit toward your next policy term.
On the other hand, if your payroll is higher than you expected and you underpaid for insurance, a debit will be added to your account, and you’ll have to pay for the difference.
Related Read: How to Calculate Workers’ Compensation Cost Per Employee
Now that we’ve explained each part of the formula, let’s do a quick example calculation. To keep things simple, let’s use the example of a Florida plumbing business called Happy Pipes. It has four total employees and they're all plumbers. In total, these plumbers make $150,000 per year in wages.
Also, Happy Pipes has been around for more than five years and has an excellent safety record, so it has an Ex-Mod of 0.75. The company also got a $25 credit after its last policy term ended, since it overestimated the previous year’s payroll.
Ready? Here we go. First, we’ll divide the total $150,000 payroll of the business by 100. Then, we’ll multiply the base rate of a plumber in Florida ($3.70).
$150,000 / 100 = 1500
1500 x $3.70 = $5550
Next, we need to multiply this number with the Ex-Mod, as follows:
$5,550 x 0.75 = $4162.50
Finally, we’ll deduct the $25 credit from this number to end up with the final yearly cost of workers’ compensation insurance at Happy Pipes:
$4162.50 - 25 = $4137.50
So, in total, Happy Pipes will pay $4,137.50 per year in workers’ comp to cover its four employees. Here’s what this calculation would look like in a single formula.
($3.70 x 1500 x 0.75 ) - $25 = $4137.50
Since all carriers are required to charge the same base rate for coverage in Florida, you don’t gain as much by shopping around for coverage. Unlike in other non-base rate states, insurance companies won’t be able to offer substantially different rates to your business.
However, that doesn’t mean you can’t take steps to keep workers’ comp costs under control at your business. There are a variety of ways that you can keep your premiums low and reduce your overall costs. Here are a few suggestions
If your Florida business is required to carry workers’ compensation insurance, this information should help you secure the right coverage at the best possible price. If you’re ready to start the purchase process, get a free quote from WorkCompOne.
With our online tools, you can get a quote in just minutes, get the coverage you need, and get peace of mind. Get started today, and keep your workers’ comp costs under control in Florida.