Insurance Tip #2
Understanding what an
insurance premium audit is.....
and why you don't want one
What you, as a contractor, must
know to protect yourself from the
potential of financial disaster
The insurance premium audit is a provision in most business insurance contracts. The purpose of the audit is to obtain the exact exposures and compare them to what was estimated by you. The exposures will be in the form of either payroll or sales figures you will be asked to report. This information is used to determine your final premium. It’s the audit that confirms what your premium is..."or should have been". The audit is completed an entire year after you bought your policy. Shortly after your policy expires you will need to verify the accuracy of what you estimated when the policy was originally started.
Here is an example of how an audit can impact you:
#1 ~ When a contractor goes into business he is asked to estimate what his sales figures will be over the next 12 months. It's almost impossible to predict the future. A million things will happen that are unexpected. So, a very conservative estimate is often given. Your agent provides you with a policy costing $700 per year based on your conservative estimate. Everyone is happy until a YEAR later when the audit paperwork shows up. First, you have to spend the time filling in and finding all of the information being asked of the insurance carrier. As your filling out the paperwork you realize that your actual sales figures were actually TWICE the amount of your original estimate. Then, the audit is processed and you receive a bill for an ADDITIONAL $700.
At Joseph D. Walters, we hear this complaint over and over again when we are talking to our potential new customers.
At Joseph D. Walters our policy is NOT subject to any premium audit…EVER. That means that you’ll know your insurance cost upfront and receive NO ADDITIONAL BILLS. It’s a huge advantage especially when the policy is extremely competitive and full of needed and hard to buy coverages that are already included.
Welcome to the world of THE PREMIUM AUDIT
The bottom line is this. The main reason you purchased insurance is to protect yourself against financial disaster. Your first mistake can be simply not knowing the differences between a policy that is audited versus one that is not. Why feel penalized for having a great year?
Call us anytime and talk to any of our licensed professionals. When you hang up you'll be smarter about insurance. Whether you are a power washer, roof or window cleaner, dealing with an experienced agency that specializes in the type of insurance coverage you need could be one of the best decisions you make regarding your business.
Because what you don't know can hurt you...
Joe Walters Insurance