Types of Property and Liability Coverage

Required Coverage

Florida law requires business owners to purchase workers’ compensation and commercial automobile insurance under the following guidelines:

Workers’ compensation insurance is required for any nonconstruction business employing four or more people and any construction business with at least one employee.

Commercial automobile coverage is required for businesses that own, lease or operate a motor vehicle.

Workers’ compensation coverage

The type of business—defined by classification codes as either construction or nonconstruction—and the business structure are the key factors in determining when coverage is required.

Applications for election of coverage or exemption from coverage must be filed with and approved by the Florida Department of Financial Services, Division of Workers’ Compensation. These applications have specific requirements and may require submission of additional documentation. Applications and instructions are available at the Division’s Web site at www.myfloridacfo.com/wc.

For more information on workers’ compensation insurance, call the Department of Financial Services Consumer Helpline toll-free at 1-800-342-2762; the Workers’ Compensation Customer Service Center at (850) 413-1601; or visit the Division’s Web site at www.myfloridacfo.com/wc.

Commercial automobile coverage

If your business owns, leases or operates motor vehicles, you must obtain commercial automobile coverage. Requirements and options vary, so check with your insurance agent to determine what types of coverage you need. You should also contact your city and county government and the U.S. Department of Transportation to check for any other requirements.

Commercial motor vehicle coverage is similar to the auto insurance most people carry on their personal cars. Most policies include property coverage for your vehicle, as well as liability coverage for damage caused by an employee driving a company vehicle. If you are using your personal automobile for a business purpose, you may not be covered, as the rules and guidelines are different for each insurance company. Review the business use of your personal vehicle with your insurance agent to be sure you are covered.

You can purchase coverage through an insurance company, or you can self-insure your vehicles. For more information on self-insurance, contact the Florida Department of Highway Safety and Motor Vehicles, Division of Financial Responsibility, Neil Kirkman Building, 2900 Apalachee Parkway, Tallahassee, FL 32399-0500, or call
850-617-2000 .

Local city and county requirements

While workers’ compensation and commercial automobile coverage may be the only coverage required by Florida law, the city or county you operate in may have additional requirements. Call the occupational license office in your county or city to find out if you need additional insurance.

Banks or lending institutions

Although not required by law, your bank or lending institution may require you to purchase property coverage if you borrow money to pay for buildings, equipment or any other property for your business.

This protects the lender’s interest, and allows you to repair, replace or pay off loans for items that are damaged or destroyed. Leased equipment or property could also have insurance requirements. Check your lease agreement for details.

Optional Coverage

Even if the law does not require your business to carry insurance, you may want to purchase some coverage to protect you, your property and your assets. This coverage is sold as a package policy that includes several types of insurance. For example: property, liability and automobile coverage could make up a package policy.
Here are some brief descriptions of the many types of insurance available to business owners. Different businesses have different needs. Ask your agent to help you choose the type of insurance coverage that best suits you.

Bonds guarantee that you will perform a specific action or provide work of a certain quality. For example, if a bonded builder fails to perform as agreed, the client can get some money back through a settlement.

Boiler and machinery insurance pays for loss or damage to your property resulting from a sudden and accidental breakdown of equipment.

Business income or interruption insurance pays lost earnings if you must suspend operation of your business because of an insured property loss.

Extra expense coverage reimburses your business for any added expenses incurred during the restoration period following damage to the business and impairment of its operations as the result of an insured loss.

Cargo and transportation insurance covers your company’s goods and products while they are in transit.

Errors and omissions insurance protects professionals from losses caused by their errors or oversights.

Fidelity insurance covers business clients or owners for losses due to dishonest acts by owners or employees.

Flood insurance covers losses to your building(s) and its contents due to flooding.

Liability insurance protects your business from financial loss as a result of injuries, deaths or property damage caused by your products, business operations or employees. There are two types:

Premises-and-operations provides coverage for accidents, such as “slip and fall” incidents, on your property.

Products-and-completed-operations helps pay for monetary losses resulting from injury or damage caused by a product or completed job.

Professional liability insurance pays liability claims arising from wrongful practice by physicians, attorneys or other professionals.

Property insurance protects business property and physical assets. There are three main types:

Named-peril coverage specifies the events that the policy will cover. For example, you may buy a named-peril policy as protection from losses caused by fire, explosion and smoke.

Comprehensive coverage provides broader coverage for all perils, except those specifically excluded in the policy.

Windstorm insurance pays for losses to buildings and their contents caused by windstorms (such as hurricanes and tornadoes) or hail.

Property Insurance: Replacement Cost vs. Actual Cash Value

With property insurance, you can buy either replacement cost or actual cash value coverage.

Actual cash value (ACV) insurance pays the cost of damaged property and goods after deducting for their depreciation. For example, if you paid $2000 for a computer five years ago, ACV would only pay its current value, say $500.

Replacement cost coverage is more expensive. It pays the cost of replacing your property without deducting for depreciation.

You should compare the premiums for replacement cost versus actual cash value when buying or renewing a policy.

Legal Expense Insurance

Legal expense insurance is available to provide you with modestly priced legal services. It also encourages you to consult with an attorney before serious problems arise.

The Department of Financial Services issues licenses to companies and agents selling legal expense insurance. These companies offer various types of plans that range from basic consultation to more complex legal services. You may contact the Specialty Products Administration of the Florida Department of Financial Services at (850) 413-3144 to request a listing of authorized legal expense plans. You can also get this list and more information by going to the Florida Bar’s Web site at www.flabar.org and clicking on “Public Information,” where you will find the link to “Group and Prepaid Legal Services.”