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Insurance Audit

Discussion in 'Business Operations' started by Charles, Mar 6, 2002.

  1. Charles

    Charles Moderator Staff Member
    Posts: 7,827

    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?
     
  2. crew

    crew LawnSite Member
    Posts: 163

    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.
     
  3. Charles

    Charles Moderator Staff Member
    Posts: 7,827

    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
     
  4. bruces

    bruces LawnSite Senior Member
    Posts: 648

    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.
     
  5. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    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.
     
  6. thelawnguy

    thelawnguy LawnSite Silver Member
    Posts: 2,412

    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.
     
  7. Charles

    Charles Moderator Staff Member
    Posts: 7,827

    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.
     
  8. LawnLad

    LawnLad LawnSite Senior Member
    Posts: 738

    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.
     
  9. bruces

    bruces LawnSite Senior Member
    Posts: 648

    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.
     
  10. Nebraska

    Nebraska LawnSite Senior Member
    Posts: 525

    I would have to agree that that is rather harsh especially if your a one man operation?!
     

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