If you own a small business in Florida, you may wonder which types of insurance you are legally required to carry and which coverages are optional.
The answer depends on several factors, including whether you have employees, the type of business you operate, whether you own or lease property, and the contracts you enter into.
There is no single insurance policy that every Florida business is required to purchase.
Understanding the difference between legal requirements, contractual requirements, and recommended coverage can help you make more informed insurance decisions.
Is General Liability Insurance Required in Florida?
Florida generally does not require every business to carry general liability insurance simply because it operates a business.
However, that does not mean general liability is unnecessary.
A landlord, customer, property manager, contractor, professional organization, or other business may require you to carry liability insurance as part of a contract or lease.
For example, a commercial landlord may require a tenant to maintain a certain amount of general liability coverage and name the landlord as an Additional Insured.
So while the state may not require general liability for every business, a contract may make it a practical requirement for your particular business.
When Is Workers’ Compensation Required?
Workers’ compensation requirements depend on the type of business and the number of employees.
Florida has specific workers’ compensation requirements that vary by industry.
For example, non-construction employers generally have different thresholds than construction employers.
Because the requirements can depend on your business structure and workforce, business owners should verify the current requirements that apply to their specific situation.
Workers’ compensation requirements can also become relevant as a business grows and hires additional employees.
What About Professional Liability Insurance?
Professional liability insurance, also called errors and omissions insurance, is generally not required by Florida law for every professional business.
However, certain professions may have specific insurance or financial responsibility requirements, and individual contracts can also require professional liability coverage.
Even when it is not legally required, professional liability can be an important consideration for businesses that provide professional advice, services, designs, recommendations, or other specialized work.
Examples can include:
- Accountants and CPAs
- Consultants
- Technology professionals
- Real estate professionals
- Marketing professionals
- Other professional service businesses
Is Commercial Auto Insurance Required?
If a business owns vehicles that are used in its operations, Florida’s auto insurance requirements and commercial auto considerations may apply.
The appropriate coverage depends on factors such as who owns the vehicle, how it is used, and how the vehicle is titled and operated.
A business that does not own vehicles may still have automobile liability exposure.
For example, employees may use their personal vehicles for business purposes, or the business may occasionally rent vehicles.
In those situations, Hired and Non-Owned Auto coverage may be worth discussing with an insurance agent.
Does Florida Require Property Insurance for Businesses?
Florida does not generally require every business to purchase commercial property insurance.
However, property insurance may be required by:
- A commercial landlord
- A lender
- A lease agreement
- A financing agreement
- Another contractual arrangement
Even when it isn’t required, business owners should consider what would happen if their equipment, furniture, inventory, or other business property were damaged by a covered event.
Contractual Insurance Requirements Are Different
One of the most important distinctions for business owners is that legally required insurance and contractually required insurance are not the same thing.
A business may not be legally required to carry a particular coverage but may still need it to satisfy a contract.
A contract could require:
- General liability insurance
- Professional liability insurance
- Specific liability limits
- Additional Insured status
- Waiver of Subrogation
- Primary and Noncontributory coverage
- Workers’ compensation
- Commercial auto insurance
- Cyber liability insurance
Before signing a contract, it’s a good idea to have the insurance requirements reviewed to determine whether your current policies meet them.
Recommended Coverage Is Another Category
Some insurance coverages may not be required by law or by a contract but can still be important for protecting a business.
For example, a technology consultant may want to consider cyber liability and professional liability coverage.
A martial arts school may have different liability exposures than a CPA.
A business with employees may have different needs from a solo consultant.
The appropriate insurance program depends on the actual operations of the business.
Requirements Can Change
Insurance requirements aren’t necessarily permanent.
Your obligations may change when you:
- Hire employees
- Change your business structure
- Move locations
- Purchase a vehicle
- Sign a new lease
- Take on a larger contract
- Add a new service
- Begin working for a new type of customer
A business that was appropriately insured when it started may need different coverage as it grows.
Don’t Confuse a Certificate With a Requirement
A Certificate of Insurance, or COI, is commonly used to demonstrate that a business has certain insurance coverage.
However, a COI does not create coverage by itself.
If a customer or landlord requires an Additional Insured endorsement, waiver of subrogation, or other specific provision, those requirements need to be addressed through the applicable insurance policy or endorsements.
The certificate simply provides evidence of certain coverage.
Review Your Requirements With an Insurance Professional
Florida business insurance requirements can depend on the industry, workforce, vehicles, property, contracts, and other circumstances.
That is why business owners should distinguish between:
What the law requires
What a contract requires
What coverage may be appropriate for the business
Those are three different questions.
Nieves Insurance Group helps Florida small businesses review their insurance needs and understand the coverage options available for their particular operations.
If you are starting a business, hiring employees, signing a new contract, or reviewing your existing insurance, contact Nieves Insurance Group to discuss your coverage needs.
