Deciding to switch workers' comp providers is the easy part. Making the transition correctly — without creating a coverage gap, an audit mess, or a compliance issue — requires attention to a few specific steps that most businesses miss the first time. Here's how to do it right.
When to Switch: Renewal vs. Mid-Term
The cleanest time to switch is at policy renewal. The existing policy expires, the new coverage begins the next day, and there's no cancellation to manage. If you're evaluating alternatives, start that process at least 60 days before your renewal date — not two weeks out.
Mid-term switches happen when a rate increase arrives, a non-renewal notice is issued, or an alternative is identified that's significantly better than waiting. Mid-term transitions are entirely doable but require a few additional steps.
Mid-Term Cancellation — What to Know
How to Cancel Your Current Policy
Submit a written cancellation request to your current carrier or broker with a specific effective date. Florida law requires carriers to provide at least 10 days' notice before canceling for non-payment and 45 days for other reasons — but as the policyholder, you can cancel with as little as 30 days' notice, or immediately with written request in some cases. Check your policy's cancellation provisions.
Return of Unearned Premium
When you cancel a traditional policy mid-term, the carrier owes you the unearned portion of any deposit or prepaid premium. This is calculated pro-rata — if you cancel halfway through a policy year and paid $12,000 in annual premium, you should receive approximately $6,000 back (minus any earned portion). Processing typically takes 30–60 days.
Loss Runs
Before you cancel your existing policy, request your loss runs from your current carrier — 5 years is the standard request. Loss runs are a claims history report that any new carrier or PEO will need. Some carriers are slow to produce these, so request them early. You're entitled to receive them; carriers are required to provide them upon request.
The Coverage Gap Risk
The most critical step: confirm your new coverage is in force before your old policy cancels. Not the day after. Not simultaneously. The new policy must be active first.
Even a one-day gap in workers' comp coverage creates exposure. If an employee is injured during that gap, you have no coverage — and depending on the circumstances, Florida DFS may also classify you as having operated without insurance, triggering the penalty framework that applies to uninsured employers.
- Receive confirmation of new coverage (certificate of insurance in hand)
- Verify the new policy's effective date
- Submit cancellation to your current carrier effective that same date
- Confirm the cancellation was processed
What to Collect Before You Switch
- 5 years of loss runs from your current carrier — request immediately
- Current experience mod worksheet from NCCI (your broker can request this)
- Payroll records for the current year-to-date and prior year — the new carrier will want these for quoting
- Class codes currently on your policy — bring these to confirm accuracy with the new provider
- Certificate of exemption if any officers are exempt — confirm validity dates
Transitioning to a PEO Program
Switching from a traditional policy to a PEO pay-as-you-go program has one structural difference worth noting: under a PEO, your employees are co-employed. This means your workers technically become employees of the PEO for payroll and workers' comp purposes.
From an operational standpoint, nothing changes — you manage your team the same way. But administratively:
- Payroll is run through the PEO's payroll system (or integrated with your existing process)
- W-2s at year-end are issued by the PEO, not your company
- Workers' comp premium is collected each payroll cycle — no separate billing
For most contractors, the transition takes 1–2 weeks of setup. Coverage typically begins with the first payroll run through the PEO. Your old policy cancels effective that same date.
The Audit on Your Old Policy
When you cancel a traditional policy mid-term, the carrier will still conduct a final audit covering the period the policy was active. This audit is calculated on your actual payroll from policy inception to the cancellation date. If payroll during that period was higher than the amount your premiums were based on, you'll receive an audit bill.
Collect and organize your payroll records for the covered period before the auditor contacts you. The more cleanly documented your records are, the more straightforward the audit will be — and the easier it is to dispute any discrepancies.
After the Switch: Confirming Compliance
Once you're operating under new coverage, update your certificates of insurance with any general contractors, property owners, or clients who have your old certificate on file. Certificates expire with the policy, and a GC relying on a cancelled certificate may flag you as non-compliant on their next insurance audit.
The transition is paperwork-intensive, but it's a one-time process. Once you're in a pay-as-you-go program with automatic billing through payroll, the annual renewal cycle becomes much simpler — no deposit to renew, no audit to manage, and no policy lapses from missed payment.