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OK.  So I wanted to review a common issue business owners face when they procure Workers’ Compensation Insurance.  Often times I get small business owners who want to be included in their Workers’ Comp policy (and we are talking about business owners in the State of Florida, Miami Florida specifically, but it could be anywhere in the State), and they tell me something like “they are only taking a salary of $30,000.”  Well, here is how it works in the State and you need to be aware of this so you do not get tripped up upon audit.

Unlike other States, unless you (business owner) sign an exemption form online with the State, a business owner is included in his Workers’ Comp Policy.  You can elect to be exempt by going online to Florida Workers’ Comp Exemption Form to exclude yourself.  However, if you decide to leave it be and include yourself, then by State Law, the Insurance Company can charge for your payroll $47,700 worth of payroll, even if you did not take out that amount of money.

So you need to be aware of that.  If you are in a blue collar trade, or any sort of business activity where the Workers’ Comp Class Code has an elevated rate of any degree, the difference could be substantial in terms of somebody taking a $30,000 payroll Vs. $47,700.  Obviously that can be a tremendous difference in your annualized premium.

So a good tip to know, if you are including yourself you need to understand that your exposure is $47,700 and even if the carrier did not charge it to you at the issuance of the policy; upon audit, they can smack you with a big additional premium.  If you exclude yourself, of course you have no coverage, but then you are not concerned with that minimum payroll/premium.

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