Posts made in September 2016

~Workers Comp Exemptions At A Glance~

Because it can be challenging to keep up with the Florida law requirements on what businesses are required to have workers’ compensation insurance and who is eligible to exempt out of these requirements, we have expanded our handy “Exemptions At-A-Glance” reference guide.­ This guide now contains coverage requirements as well as exemption information and has been retitled “Key Coverage Requirements and Exemption Information At-a-Glance.”­

The expanded guide covers the following topics:­

  • Key workers’ comp coverage requirements
  • Exemptions for construction companies
  • Exemptions for non-construction companies
  • A list of class codes the State of Florida considers to be in the construction industry.

The Exemptions At A Glance:

FLORIDA WORKERS’ COMPENSATION KEY COVERAGE REQUIREMENTS AND

EXEMPTION INFORMATION AT-A-GLANCE

FUBA Workers’ Comp created this document as a general summary of Florida law regarding workers’ compensation exemptions, and

is not intended to provide legal advice or insurance coverage advice. For specific questions, please contact a licensed insurance

agent, an attorney, or the Division of Workers’ Compensation.

Key Coverage Requirements:

1. Non-construction employers with 4 or more employees (full-time or part-time) must provide workers’ compensation

coverage for all employees.

2. Construction industry employers with 1 or more employees (full-time or part-time) must provide workers’ compensation

coverage for all employees. Florida law does not allow independent contractors in the construction industry; everyone is

either a business owner or an employee. For a list of the industries considered to be in the construction industry under

Florida law, see Rule 69L-6.021, attached to this document. If any portion of a company’s operations is in a construction

code on this list, the business is considered to be in the construction industry.

3. Construction industry employers hiring subcontractors must ensure that a subcontractor has workers’ compensation

coverage or a valid exemption. If the subcontractor has employees, the subcontractor must have a workers’ compensation

policy, even if the owner is exempt. If the subcontractor does not have workers’ compensation coverage for its employees,

those workers become the employees of the contractor. If an injury occurs, the contractor is responsible for paying the

benefits for the injury and will be assessed premium for the payroll of the subcontractors.

4. Corporate officers and LLC owners may exempt themselves from workers’ compensation coverage by filing for an

exemption with the Division of Workers’ Compensation. Corporate officers and LLC owners receiving exemptions are not

entitled to workers’ compensation benefits should they be hurt on the job.

Exemptions for Non-Construction Companies:

(Required to have workers’ compensation coverage if they have 4 or more employees)

A. Sole Proprietorships or Partnerships

1. Sole proprietors and Partners are not considered “employees” and are automatically excluded from workers’ compensation

coverage by law; they do not have to file for an exemption.

2. Sole Proprietors and Partners have no workers’ comp coverage and cannot be included on a workers’ compensation policy

unless they file form DWC 251 Election of Coverage with the state Division of Workers’ Compensation (“DWC”).

3. They can go back to being excluded by filing form DWC 251-R with the DWC.

B. Corporations

1. Corporate officers are considered “employees” and are included for coverage purposes unless they file for and receive an

exemption with the DWC (online only – paper forms are not accepted). There is no limit to the number of corporate

officers who can exempt out of workers’ compensation coverage.

2. Corporation must be registered and listed as “active” with the Florida Division of Corporations (sunbiz.org). Applicant must

be listed as an officer of the corporation in the Division of Corporations’ records.

3. There is no charge for a non-construction exemption.

4. Non-construction exemptions issued on or after 1/1/13 expire after 2 years and must be renewed every 2 years to remain

valid. Non-construction exemptions issued prior to 1/1/13 are valid until they are revoked; they do not expire.

5. Exemption can be revoked by filing form DWC 250-R with the DWC.

C. Limited Liability Companies (LLC)

1. Owners (usually called “members” or “managing members”) of non-construction LLC’s are considered “employees” and are

included for coverage purposes unless they file for and receive an exemption from the DWC (online only – paper forms are

not accepted).

2. The LLC must be registered and listed as “active” with the Florida Division of Corporations (sunbiz.org). Applicant must own

at least 10% of the LLC to be eligible for an exemption.

3. Up to 10 LLC owners may elect to be exempt.

4. The exemption is free and must be renewed every 2 years to remain valid.

5. Exemption can be revoked by filing form DWC 250-R with the DWC.

Construction Companies:

(Required to have coverage for all employees)

A. Sole Proprietorships or Partnerships

1. Sole proprietors and partners in the construction industry are considered employees and are automatically included for

workers’ compensation coverage purposes. They are not eligible to exempt out of workers’ compensation coverage. They

must have workers’ comp coverage to work legally in the state of Florida.

B. Corporations

1. Corporate officers are considered “employees” and are included for coverage purposes unless they file for and receive an

exemption from the DWC (online only – paper forms are not accepted).

2. Up to 3 corporate officers of a construction corporation can file for an exemption.

3. Corporation must be registered and listed as “active” with the Florida Division of Corporations (sunbiz.org). Applicant must

be listed as an officer of the corporation in the Division of Corporations’ records.

4. Applicant must own at least 10% of the corporation’s stock to apply for an exemption.

5. Exemption costs $50 and must be renewed every 2 years to remain valid. Renewal costs $50.

6. Exemption can be revoked by filing form DWC 250-R with the DWC.

C. Limited Liability Companies (LLC)

1. Owners (usually called “members” or “managing members”) of LLC’s are considered “employees” and are included for

coverage purposes unless they file for and receive an exemption from the DWC (online only – paper forms are not

accepted).

2. Up to 3 LLC owners may file for an exemption with the DWC.

3. LLC must be registered and listed as “active” with Florida the Division of Corporations’ database (sunbiz.org). Applicant

must be listed as an officer of the corporation in the Division of Corporations’ records.

4. Applicant must own at least 10% of the LLC to be eligible for an exemption.

5. Exemption costs $50 and must be renewed every 2 years to remain valid. Renewal costs $50.

6. Exemption can be revoked by filing form DWC 250-R with the DWC.

All exemptions must be applied for online at the Division of Workers’ Compensation’s website: www.myfloridacfo.com/wc.

Applicants must provide a driver’s license or ID card number.

 

This information is provided as a general summary of Florida law regarding workers’ compensation exemptions.­ It is not intended to provide legal advice or insurance coverage advice. For specific questions, please contact a licensed insurance agent, an attorney, or the Division of Workers’ Compensation.

 

~Cyber Risk Misconceptions Popular with Midsized Firms~

cyber

 

Despite frequent reports of hacking, cybercrime, security breaches and related events in all parts of the U.S., many middle market companies continue to underestimate their exposure to these attacks along with their need for focused risk management measures, which may include the purchase of specialized insurance.

A new report from Assurex Global, a privately-held commercial insurance brokerage group, identifies four misconceptions about cyber risks, predominantly among mid-sized and small businesses

Number one on the list is the notion that cyber events primarily affect larger businesses.

“Even though you may not hear about breaches at $50 million or $100 million manufacturers, they’re happening,” says Mike Richmond, a risk advisory executive at The Horton Group, an Assurex Global partner. “Sometimes that’s because the cyber protection at smaller companies isn’t as sophisticated, so hackers consider them an easy target.”

Even though you may not hear about breaches at $50 million or $100 million manufacturers, they’re happening.

The second biggest misconception: “My type of business isn’t a target.”

“As the growing number of victimized companies attest, that misconception is being debunked nearly every day,” Richmond says. “There’s no question that every enterprise is now a potential target for a cyber-attack – public, private or nonprofit, you still may be vulnerable.”

The report cites Symantec’s list of the top sectors breached in 2015 by number of incidents: services; finance, insurance and real estate; retail trade; public administration; and wholesale trade.

The third leading misconception: a business can self-insure against a data breach.

In fact, the high cost of cyber-attacks makes this a perilous option, especially for small and mid-sized companies, say the Assurex experts. The average cost of a data breach for 350 companies participating in the Poneman Institute’s 2015 Cost of Data Breach Study was $3.79 million, up 23 percent from 2013.

“If a data breach occurs today, businesses are almost certain to be subject to defense costs even if customers have yet to suffer any immediate or identifiable loss from the data breach,” says Richmond. “Once there’s a breach, costs can mount rapidly.”

The fourth misconception: many firms believe they’re insulated from financial consequences of cyber events because they outsource their network security, data management and payment transactions.

Yet, according to the report, as the original data owner, a company sustaining an attack will likely be named in third-party lawsuits and be held liable in most jurisdictions. While a vendor agreement may contain indemnification provisions, there may be caps on indemnification amounts and exclusions for certain types of data breaches. Further, the vendor may become insolvent, bankrupt, or simply not honor the agreement.

Cyber Coverage

“We’re working with customers now to continuously improve their front-end protection; then, adding insurance to make sure that if something slips through the cracks, the company has insurance to pay for it,” Richmond says.

With respect to insurance, Richmond recommends companies consider two primary types of coverage for cybercrimes: a cyber liability/data breach policy and a commercial crime policy.

Cyber liability/data breach policies can include third-party coverage, first-party coverage, and media liability. Meanwhile, many commercial crime policies can be structured to address certain cyber-related risks otherwise not covered under a cyber liability policy, such as those involving certain phishing scams and corporate account takeover.

Although many firms opt to structure cyber coverage as an endorsement to their package policy rather than purchasing standalone cyber insurance, Richmond says standalone policies usually have higher limits, fewer exclusions, and are more comprehensive.

In choosing insurance he suggests businesses work with an insurance agent, get support from the company’s C-level executives, and take steps to identify the firm’s risk and critical protection needs.

Richmond adds: “Start with the question: If a data breach happens, how would your company pay for the damages? This should impel businesses to assess their risks, shore up their risk management, and investigate and purchase cyber liability insurance.”

Assurex Global is an exclusive partnership of independent agents and brokers with $28 billion in annual premium volume and more than 600 partner offices.

 

If you would like to speak with one of our agents please contact our office.