A carpenter in Lakeland passes his contractor exam after years of working for someone else, and he’s ready to apply for his license. The application asks for proof of general liability insurance and proof of workers’ compensation or an exemption. He buys the cheapest liability policy he can find online and files an exemption for himself. The license comes through. Then the first builder he talks to rejects the certificate: the policy excludes new residential construction, the builder doesn’t accept exemptions, and the general liability doesn’t include completed operations. He’s licensed, but he can’t start the job.
Getting a contractor license in Florida means meeting the state’s insurance requirements, and those requirements are a starting point, not a finish line. The policy that satisfies the licensing board needs to be the same policy that satisfies the contracts you want to sign. Buying it once, correctly, saves money and weeks of delay.
Certified or Registered
Florida issues two kinds of contractor licenses through the Construction Industry Licensing Board. A certified license lets you work anywhere in the state. A registered license is based on a local certificate of competency and lets you work only in the counties or cities where it’s registered. Both require proof of insurance, and so do many of the local licensing offices that issue certificates of competency, which may have their own rules on top of the state’s.
General Liability: Meeting the Minimum Isn’t the Goal
The licensing board requires proof of general liability coverage at minimum limits set by rule, with higher minimums for general, building and residential contractors than for specialty trades. Those minimums are well below what most general contractors, builders, property managers and commercial clients require, so a policy written only to satisfy the license will usually need to be rewritten before the first real contract.
The bigger risk is a policy that meets the minimum but doesn’t cover the work. Many contractor policies in the excess and surplus lines market exclude new residential construction, condominiums, roofing or work above a certain height, and most limit coverage to the trade described on the policy. Describe everything you plan to do when the policy is written, and make sure it includes completed operations and the additional insured endorsements your clients will ask for. Our article on general liability for contractors explains the endorsements that decide coverage.
The name on the policy matters too. If you’re licensing a business through a qualifying agent, the insured name should match the business on the license application and the contracts you’ll sign.
Workers’ Compensation or an Exemption
The licensing board also requires proof of workers’ compensation coverage or an exemption. In Florida construction, coverage is required from the first employee. Corporate officers and LLC members who own at least ten percent of the business can file an exemption for themselves with the Division of Workers’ Compensation, and many new contractors start that way.
An exemption has real limits. It covers only the owners named on it, never employees or helpers, and it expires and has to be renewed. Many general contractors and builders won’t accept an exemption from a subcontractor, because Florida law makes them responsible for the workers’ compensation of an uninsured sub’s employees. If you plan to hire anyone, or work for builders who require a policy, it may make sense to buy one from the start. Our articles on workers’ compensation for contractors and PEO workers’ comp explain the options for new contractors.
Financial Responsibility and Bonds
Florida also reviews an applicant’s financial responsibility, including credit. Applicants whose credit falls below the board’s threshold can still be licensed by posting a license bond or a letter of credit. Beyond licensing, some counties and cities require bonds for permits, and public and larger private projects often require performance and payment bonds. Our articles on how to get bonded as a new contractor and how much a contractor bond costs go into detail.
After the License: What Your First Contracts Will Ask For
Once you’re licensed, the requirements come from your clients. Expect requests for higher general liability limits, completed operations, additional insured status for ongoing and completed work, primary and noncontributory wording, a waiver of subrogation, commercial auto on your work vehicles, a workers’ compensation policy and, for larger jobs, an umbrella. Building departments may ask for a certificate when you pull permits. Send the insurance section of a contract to your agent before you sign it, so the policy can be adjusted in time. Our articles on insurance requirements for contractors and additional insured coverage cover what to expect.
If you’ll use a truck or van for work, it generally belongs on a commercial auto policy, and the tools inside it need their own coverage. Our article on commercial auto for contractors explains why.
Before You Apply
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Are you applying for a certified or a registered license, and does your local office have its own requirements?
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Does your general liability meet the board’s minimum and the limits your future clients will require?
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Does it cover all the work you plan to do, including new homes, condos or roofing if they apply?
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Is completed operations included, with additional insured endorsements available?
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Is the insured name the same as the business on your license application?
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Will you file an exemption or buy a workers’ compensation policy, and will your clients accept an exemption?
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Will you need a license bond because of your credit, or bonds for permits and projects?
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Is your work vehicle on a commercial auto policy?
For more, see our contractor insurance page, what insurance a contractor needs in Florida, how much contractor insurance costs, our guide to insurance for new Florida businesses by license type and our Spanish-language guide to workers’ comp exemptions for contractors.
Contractor License Insurance With Prestige
Prestige Insurance Group helps new contractors across Florida get licensed and start working, from general contractors and roofers to painters, drywall, flooring, electrical and plumbing trades. We work with over 100 MGAs and specialty markets, including markets for new contractors with no prior insurance history, and we can issue the certificate the licensing board needs. Tell us which license you’re applying for and the kind of work you plan to do, and we’ll build a policy that works for the license and for your first contracts. Call the office nearest you. Se habla español.
Miami: 305-969-8776 Orlando: 407-993-2331
General information only, not legal advice. Licensing, insurance, workers’ compensation and financial responsibility requirements are set by the Florida Construction Industry Licensing Board, the Division of Workers’ Compensation and local licensing offices, and they change over time; confirm current requirements with the licensing agency before applying.
