7 Insurance Mistakes Florida Contractors Make — and How to Avoid Them

This is the single most expensive mistake Florida contractors make. When you hire a subcontractor who doesn't have workers' comp or general liability coverage, you're exposed in two ways: (1) their wages get added to your payroll during audit, and (2) if they cause damage or get injured, your policy may be on the hook.

The fix: collect a certificate of insurance before work starts, every time. Verify it's active using the Bright Coast Policy Verification tool — a COI can be forged, but the DFS database cannot. Keep COIs organized by subcontractor and policy year.

Personal auto insurance policies exclude business use. If you're driving to job sites, hauling materials, or transporting tools and equipment in your personal vehicle, you have no coverage if you're in an accident. Florida requires commercial auto insurance for business-use vehicles.

This is especially common among sole proprietors and small contractors who think their personal policy covers everything. It doesn't. One accident can result in a six-figure judgment with no insurance to pay it.

Workers' comp and general liability premiums are based on class codes. If your employees are assigned to the wrong code — typically a higher-rated one — you're overpaying. Conversely, if you're assigned to a lower-rated code than your actual work warrants, you'll face a large audit bill at year-end.

Common errors: lumping all payroll into the highest-rated code, not splitting payroll between field and office employees, and using the wrong code for specialty trades. Use the Bright Coast Class Code Lookup to verify you're in the right code.

A lapse in workers' comp coverage — even for one day — can result in a stop-work order from the Florida DFS and suspension of your contractor license by the CILB. Reinstating coverage after a lapse is more expensive than maintaining it continuously, and the gap in coverage leaves you personally liable for any injuries that occurred during the lapse.

Set up automatic payments and calendar reminders for renewal dates. Make sure your broker notifies you well in advance of any renewal.

The Florida CILB minimum for general liability is $300,000 per occurrence — but that's not enough for most commercial work. A single property damage claim on a commercial job can easily exceed $300,000. Most commercial project owners require $1M–$2M per occurrence, and government contracts often require $2M–$5M.

Carrying inadequate limits means you either can't bid the job or you're personally liable for anything above your policy limit. The premium difference between $300K and $1M is typically modest — usually less than 20%.

A structure under construction is not covered by a standard property insurance policy — it needs builders risk insurance. If a fire, hurricane, or theft occurs on an active job site without builders risk, the loss falls on whoever owns the structure at that point (usually the GC or the owner).

On residential projects, confirm in writing whether the homeowner is carrying builders risk. On commercial projects, the GC should carry it. Don't assume — get it in writing before the first nail goes in.

Many contractors sign their insurance policy without reading it. Key things to review: exclusions (what's not covered), the definition of "employee" and "subcontractor," additional insured requirements, and the audit provisions. A policy that looks cheap may have exclusions that leave you exposed on your most common work.

Ask your broker to walk you through the exclusions page. If you don't understand something, ask. The time to discover a coverage gap is before a claim, not after.