Insurance Audit

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

  1. heygrassman

    heygrassman LawnSite Senior Member
    Messages: 509

    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..

  2. LawnLad

    LawnLad LawnSite Senior Member
    Messages: 738

    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.
  3. John DiMartino

    John DiMartino LawnSite Silver Member
    Messages: 2,555

    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.
  4. lawnboy53

    lawnboy53 LawnSite Member
    from Neb
    Messages: 69

    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.
  5. 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.
  6. 65hoss

    65hoss LawnSite Fanatic
    Messages: 6,360

    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.
  7. John Allin

    John Allin LawnSite Bronze Member
    Messages: 1,488

    I agree.
  8. site

    site LawnSite Member
    Messages: 168

    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.

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