In Florida, what is the minimum general liability insurance coverage amount required for general contractors?
Correct Answer
A) $1,000,000 per occurrence
Florida requires general contractors to maintain a minimum of $1,000,000 in general liability insurance per occurrence. This coverage protects against third-party claims for bodily injury and property damage arising from construction operations.
Why This Is the Correct Answer
Florida Statute 489.115 mandates that general contractors maintain minimum general liability insurance coverage of $1,000,000 per occurrence. This requirement ensures adequate financial protection for third parties who may suffer bodily injury or property damage due to construction activities. The statute specifically sets this amount to provide sufficient coverage given the potential risks and costs associated with general contracting work in Florida.
Why the Other Options Are Wrong
Option B: $500,000 per occurrence
$500,000 per occurrence is insufficient under Florida law. While this amount might seem substantial, Florida's statute specifically requires double this amount ($1,000,000) to ensure adequate protection for the public and property owners against potential construction-related damages and injuries.
Option C: $300,000 per occurrence
$300,000 per occurrence falls significantly short of Florida's statutory requirement. This lower amount would not provide adequate protection for the substantial risks associated with general contracting work, which is why the state mandates much higher coverage levels.
Option D: $100,000 per occurrence
$100,000 per occurrence is far below Florida's minimum requirement and would provide inadequate protection. Given the potential costs of construction-related accidents and property damage, this amount is insufficient to protect both contractors and the public they serve.
Memory Technique
Remember 'Florida Million' - Florida general contractors need $1 Million in general liability coverage. Think 'Big state, big projects, big protection = $1M minimum.'
More Business & Finance Questions
A general contractor purchases equipment worth $45,000 with a useful life of 9 years and no salvage value. Using straight-line depreciation, what is the annual depreciation expense?
What is the typical recommended coverage amount for general liability insurance for a small to medium-sized general contracting business?
A contractor estimates startup costs of $75,000 for equipment, $25,000 for initial inventory, $15,000 for insurance premiums, and $10,000 for working capital. They can finance 70% of the total. How much cash do they need?
When establishing professional relationships with architects and engineers, what is the most important factor for a general contractor to consider?
A partnership agreement for a construction company should address all of the following EXCEPT:
A contractor purchases a truck for $60,000. After 5 years, it has accumulated depreciation of $35,000. What is the truck's book value?
A contractor's business plan projects first-year revenue of $500,000 with a 15% net profit margin. If actual revenue is $450,000 with the same profit margin, what is the variance in net profit?
Using the Modified Accelerated Cost Recovery System (MACRS), construction equipment is typically depreciated over how many years?
A contractor is comparing financing options for equipment purchase. Option A: $80,000 cash purchase. Option B: $20,000 down, $65,000 financed at 6% for 4 years. What is the total cost of Option B?
A contractor purchases equipment using a capital lease with a present value of $120,000. How should this be recorded on the balance sheet?