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Charles
03-06-2002, 04:26 PM
I just received notice by my insurance company that an outside auditer was coming by(appointment) to audit my books. WTFs up with that? he wants to see tax returns, profit loss statements etc. I don't think its none of their dayum business. Thinking about what steps to take ie either change companies or let them do it. I dont have nothing to hide but it seem invasive and generally a pain in the azz and has nothing to do with my general liability insurance. Anyone else had this happen and how did it go?

crew
03-06-2002, 04:36 PM
Is it a workers comp audit? Do you have w/c? My policy is "audited" every year over the phone. Never to the extent you are talking. I'd tell them to piss off or at least ask what they hope to find...best case /worst case.

Charles
03-06-2002, 04:41 PM
Crew, they want just about everything that has to do with your business.
GRs
Fed quat rep
State unempll
Subcontractors
Check book
cash receipt
ledgers
profit loss statements
No I dont have workmens comp and didnt sub anything out

bruces
03-06-2002, 04:53 PM
Your WC premium is based on payroll. The premiums you have paid are based on estimated payroll. The audit is to determine what your actual payroll was for the policy period. If your payroll was higher than the estimated payroll, you will owe an additional premium. If it was less, they will owe you money.

General liability is the same way, only it is generally based on revenue. You really don't have a choice.

Some companies do a mail audit, where you send them the information they want instead of coming out.

rodfather
03-06-2002, 04:53 PM
My insurance carrier "audits" us once a year...it's just a one-page form to fill out. Real simple for us. But I gotta agree, this seems to be a bit much.

thelawnguy
03-06-2002, 04:59 PM
I had the insurance audit the first year, woman came to the office to check the books, once they saw I was small-potatoes my agent now handles it in his office via phone every year.

Just want to make sure your sub expenditure is what you say as well as payroll etc.

Charles
03-06-2002, 05:06 PM
Thanks for the info :). I think I will direct him to my accountant. I can't take off half a days work late in march to meet with the goober.

LawnLad
03-06-2002, 06:01 PM
Charles - if you're buying from an agent and he values your business, tell him you don't want to deal with the invasive crap and that he should place you with a more "business friendly" carrier.

The agent I was with when I started out put me with Celina Insurance. They wanted to audit by payroll hours. Their formulas for part time and full time (didn't correlate with seasonal) would have cost me about 15 to 20 man hours of office prep to convert numbers. I tried to work through it with them, but ultimately they said it had to be their way. I told them I wouldn't submit to an audit since they were being unreasonable.

I went to Grange Insurance through the same agent, avoiding the BS audit. Grange did it off of payroll dollars. My agent used to set the amount each year when we'd review the policy. Never had to show documentation.

I think it comes down to your agent, the carrier demands, and what your agent can do for you in that relationship. Find someone who values your business and understands your concerns and will find a less intrusive way to check the information.

bruces
03-06-2002, 06:26 PM
Originally posted by LawnLad
Charles - if you're buying from an agent and he values your business, tell him you don't want to deal with the invasive crap and that he should place you with a more "business friendly" carrier.

The agent I was with when I started out put me with Celina Insurance. They wanted to audit by payroll hours. Their formulas for part time and full time (didn't correlate with seasonal) would have cost me about 15 to 20 man hours of office prep to convert numbers. I tried to work through it with them, but ultimately they said it had to be their way. I told them I wouldn't submit to an audit since they were being unreasonable.

I went to Grange Insurance through the same agent, avoiding the BS audit. Grange did it off of payroll dollars. My agent used to set the amount each year when we'd review the policy. Never had to show documentation.

I think it comes down to your agent, the carrier demands, and what your agent can do for you in that relationship. Find someone who values your business and understands your concerns and will find a less intrusive way to check the information.

One thing to consider is that some policies are based on straight time dollars, so if you are paying overtime at time & 1/2 and they look at total dollars, you will be paying too much.

Good point about the agent & company, I see a lot of companies that do a mail out audit, they send you a form to fill out and send back to them with wage information for the policy period, they don't have to actually come examine your records.

Nebraska
03-06-2002, 08:01 PM
I would have to agree that that is rather harsh especially if your a one man operation?!

heygrassman
03-06-2002, 08:11 PM
What does General Liability have to do with payroll hours? Are they basing the likleyhood of an accident occuring on the number of employees that are working and the respective number of hours? This makes no sense to me what so ever but I am a little groggy 2nite..

jf

LawnLad
03-06-2002, 10:21 PM
Machines don't cause accidents, people do. GL coverage is for covering the risk of people's behavior/actions on the job. I believe since the underwriters have to be able to have a formula of some sort to evaluate risk, they make a relationship with a number that is on a continuum they can predict or relate to. If your payroll expense goes up from one year to the next- you most likely have more employees out there working, therefore there is an increased risk since logically you'd have more people out there to potentially cause accidents. So your premiums go up accordingly.

John DiMartino
03-06-2002, 10:41 PM
We just had one too, this yr for the first time in 3 yrs.It didnt take long,and to get accurate insurance prices it must be done.Invasive or not,if they are backing us,they need to know how much we do,to price our coverage as competitive as possible.

lawnboy53
03-13-2002, 10:50 AM
I have an audit every year myself.
Part one is to determine the workmans comp, and I have no argument on that one.
Part 2 is to determine your General Liability rates. This one I have concerns about. They base my premiums off of revenues. I understand this method to a point but if I were to raise all my prices 20% my insurance would go up and the Insurance company would have had no additional exposure.
With this said I'm fairly happy with my rates so I wont rock the boat to much right now.

LAWNGODFATHER
03-14-2002, 03:28 AM
Also if you use the lawn care percent and the scaping percent you could get nailed on that also.

But as lawnlad, and rodfather said I do the same, fill out reg pay payroll dollars and done.

65hoss
03-14-2002, 04:43 AM
I get a phone audit on my GL in the spring. I would NOT open my books up to these people. Period. Not to hid anything, but its not his damn business to be into all that. This is generally based off total sales. If they want to see something, print out a copy of your financial statements in a simple format. That would be ALL they would get from me. There is NO WAY I would open my checkbook up for anyone. As a small business and a solo operator that you are, this is none of his business.

John Allin
03-14-2002, 08:16 AM
I agree.

site
03-14-2002, 09:56 AM
One thing to get in order before you get audited is to get a certificate of insurance from any subcontractor you use. The auditor wont make a big deal about it if you dont have them, but they can and will consider every $ you pay these subs as YOUR payroll. That means you will be paying workers comp ins. for any sub without a certificate.