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What budding entrepreneurs should know about Florida's insurance requirements

When an entrepreneur finally decides to move ahead with their plans for starting a small business, it will initiate a process that is equal parts excitement and exhaustion. That's because in addition to doing everything in power to seeing their vision for a thriving enterprise become a reality, the budding small business owner will also have to handle a host of far more mundane yet crucial tasks.

By way of example, consider that they will need to take steps to ensure that they are in compliance with Florida law as it relates to insurance.

What types of insurance are business owners required to purchase under state law?  

State law dictates that businesses must purchase workers' compensation coverage and/or commercial automobile coverage if they meet certain requirements.

Specifically, a business is required to carry work comp insurance if 1) it is a non-construction entity employing at least four people, or 2) it is a construction entity employing at least one person.

Regarding commercial auto coverage, this is required for those businesses that own, lease or operate a motor vehicle.

What exactly do these two types of insurance cover?

For those unfamiliar with either type of coverage, a work comp policy is designed to provide partial wage replacement and medical benefits to employees injured as a result of work-related activities, and, by extension, protection from a possible civil lawsuit filed by the injured employee.

As for a commercial auto policy, it will typically include liability coverage for accidents caused by covered parties (i.e., employees) and property coverage for any damage to company vehicles. Experts indicate that it's important for business owners who plan to use their personal auto policy for business purposes to read the policy language very carefully, as it may expressly exclude this type of coverage.

Do business owners have to carry any other type of insurance?

State law only dictates that work comp coverage and commercial auto coverage must be secured under the circumstances discussed above. However, it's possible that the city or county in which an entrepreneur plans to establish operations has their own insurance requirements.

Furthermore, there's also the distinct possibility that the terms of a bank loan taken out to secure equipment, buildings or other property dictate that the business owner must purchase the necessary property coverage.

We'll continue this discussion in our next post, exploring some of the other types of insurance that nascent business owners might think about securing despite being purely optional.

If you are a business owner engaged in a dispute with the insurance company -- denial of claims, underpayment of claims or delayed processing of claims -- consider speaking with a skilled legal professional to learn more about your options.   

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