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Insurance wants P&L for "premium audit"

Discussion in 'Business Operations' started by lawncuttinfoo, Jun 29, 2013.

  1. lawncuttinfoo

    lawncuttinfoo LawnSite Bronze Member
    Messages: 1,010

    Has anyone encountered this for a general liability policy?
    We are audited for workers comp each year which makes sense but this is the first time after 10 years on the same general liability policy that they say the premium was based on estimated figures. My thought is that a 2 mil policy price is for just that, how much it costs for a 2 mil policy.

    I can see why they want to do it, I mean I would love to ask all potential customers what their gross income is before I give them their fimal price! :laugh::laugh:
  2. windflower

    windflower LawnSite Bronze Member
    Messages: 1,095

    I had one insurance company do the same thing. Said they needed to judge exposure. I notice you are in MN does the name of the insurance start with the letters L and M?
  3. grandview (2006)

    grandview (2006) LawnSite Gold Member
    Messages: 3,465

    part of your premium is based on revenue.
  4. JCLawn and more

    JCLawn and more LawnSite Fanatic
    from MI
    Messages: 5,281

    Mine asks me for that every year. Its so they justly cover their risk of exposure. Someone with a 400k gross will have more insurance claims and potential for greater loss than someone with a 30k gross.
    Posted via Mobile Device
  5. lawncuttinfoo

    lawncuttinfoo LawnSite Bronze Member
    Messages: 1,010

    negative on the L&M it's a small company from WI

    Just strange I've had the same policy for over 10 years now and this is the first audit, and there was no wording that it was an estimate.

    Could work the same way for my customers, those with a higher income will have higher expectations and require more time to make them happy. Think I'll try to land this company's lawn and pull the same BS at the end of the season!
  6. JCLawn and more

    JCLawn and more LawnSite Fanatic
    from MI
    Messages: 5,281

    That would be epic haha
    Posted via Mobile Device
  7. wbw

    wbw LawnSite Fanatic
    Messages: 5,997

    Bottom line is that this is a standard practice. And a reasonable practice.

    Let's say you want liability insurance on a car. A million dollars worth of liability. Would you expect it to cost the same no matter what car you drive or do you think it might cost more to insure a Dodge Viper than a Yugo? A two million dollar liability policy for a company with two hundred employees will and should cost more than a policy for a solo operator.

    This has nothing to do with how much you "make" it has to do with how much exposure you have and you already do this with your customers unless you charge the same price for every lawn. I bet you charge more for a bigger lawn (more exposure) than you do a small lawn (less exposure).
    Posted via Mobile Device
    Last edited: Jun 30, 2013

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