Surprise endings are not always welcome, especially when it comes to premium audits. Your agent should play a key role in facilitating the audit by helping you understand the reasons for the audit, the audit process, and the preparations that can be made to help the audit go smoothly and minimize audit mistakes.
A premium audit is a determination of the ACTUAL insurance exposures for the coverages you have based on an examination of your operation, records and books of account. When your policy is issued, your premium is ESTIMATED based on the information provided at that time. An audit establishes the CORRECT premium base for your insurance coverage by verifying actual exposures. After the audit, an adjustment will be made to the premium that was estimated at the beginning of the policy term.
KEEPING GOOD RECORDS MAY SAVE YOU TIME AND MONEY!!!
You may be eligible for allowable credits based on the classification rating rules but you will need to provide the necessary records and detail to take advantage of the credits. Payroll is the most common basis for insurance premiums and INCLUDES any money paid for services, such as:
- Vacation, Holiday or Sick pay
- Wages or Commissions
- Payments for piece work
- Profit sharing plans
- Value of board, lodging
- Overtime (Regular Portion Only)
- Tool allowance
- Statutory payments
- Other substitutes for cash
- Tips & other gratuities
- Employer contributions to group pension plans
- Severance pay (except for accrued vacation time)
- Reimbursements for business expenses such as automobile, meals, lodging, etc…
- Safety awards/bonuses (this varies between carriers and needs to be approved at policy inception)
Verify Certificates of Insurance for Subs & Independent Contractors!!
Certificates of Insurance should be kept for ALL contract labor used during the policy period. Certificates of insurance must reflect that General Liability and Workers Compensation coverage was in place for the contractor during the full policy term. The insurance carrier may include contract labor with the audit payroll in the absence of valid certificates of insurance (Resulting in additional premium due!).
For any additional questions on this topic please give Jeannette Blanton Insurance Agency / A Higginbotham Co. a call. If you are dealing with an audit issue with your current carrier and are left with many unanswered concerns, please contact us today for a complimentary review.
Research shows that approximately 80% of accidents are directly related to the person involved in the incident rather than an unsafe work environment. In fact, research shows unsafe work behavior causes four times as many accident than unsafe work conditions.
After an accident, people tend to look for someone or something to blame rather than identifying the root cause. Below are a few of the unsafe workplace behaviors that can lead to accidents.
- Taking Shortcuts: It’s only natural to look for ways to do our jobs faster and more efficiently. But do these time savers come at the expense of your own safety, or that of other workers? Shortcuts that reduce your job safety are not shortcuts at all, but an increased risk of injury.
- Being Over Confident: Confidence is usually never a bad thing, but too much confidence in one’s work ability can lead to improper procedures, tool mishandling, etc., which could lead to an accident.
- Poor Housekeeping: When clients, managers or safety professionals walk through your workplace, cleanliness is usually an accurate indicator of everyone’s attitude about quality and production safety. Poor housekeeping creates hazards of all types. A well maintained area sets a standard for others to follow. Good housekeeping involves both pride and safety.
- Ignoring Safety Procedures: Purposely ignoring known safety procedures can endanger not only you buy your co-workers, too.
- Failure To Plan: Hurriedly starting a task, or not thoroughly thinking through the process, can put you in harm’s way.
Do they know your business?
Do you know your agent? Do you trust your agent? Do they explain your policies to you at least once a year? More importantly: Does your agent KNOW what you do?
It is more common than not for agents to misclassify a company’s operations. This goes for contractors, sub-contractors, etc… Mistakes like this typically remain unoticed unless there is a large claim that isn’t covered, or if you are audited and the carrier makes many changes.
There are larger problems you face by choosing an agent who doesn’t know your industry and how it works. These agent’s policies usually have MANY exclusions that specifically relate to the type of work you are doing…Unfortunately, you will not know until a claim is DENIED!
If your agent does not know your business, chances are, they are putting you with a carrier who doesn’t know either!
SERVICE is another important factor when determining if your agent is right for you. As an insured, you should be able to receive the following items within the same day of a request:
- Certificates of Insurance
- Copies of Policies
- Auto ID cards, changes, etc…
IN SHORT, GRILL YOUR AGENT!
As an employer, YOU bear the responsibility to know if an employee has something in their driving background that could potentially create a risk or harm to others. If you do not take the proper steps in obtaining your employees’ driving records and give them authorization to operate a vehicle for company business, you are only hurting your business by increasing your chances of a serious claim-REGARDLESS of whether the employee was in a company vehicle or their personal vehicle.
What is referred to as “Negligent Entrustment” is when a company knew, OR SHOULD HAVE KNOWN, that it put an unsafe driver behind the wheel.
Some factors that determine an unsafe driver include:
Driving With A Suspended License
Driving Without A Commercial Driver’s License (CDL) When Required
A Driving Record With Several At-Fault Accidents or Moving Violations
An employer can reduce their exposure to negligent entrustment by having a formal fleet safety program that is implemented and documented. Some examples include:
Review of Potential Drivers’ Motor Vehicle Reports
New Employee Orientation & Training
Ongoing Driver Training
Drug & Alcohol Testing
To download the entire bulletin regarding negligent entrustment, click here
Don’t let an injured employee cost you your company!
Unless you are ready to hand your company over to an employee, you SHOULD be carrying workers’ comp coverage!
Many Texas employers have the mind set: “Texas doesn’t require me to carry workers’ comp, so therefore, I don’t need it!”
Not that simple. Just because you do not carry workers’ comp, does not mean you are off the hook!
Not only can an injured employee sue you for all medical expenses and lost wages; they can sue you for punitive damages, and pain and suffering (AND WILL WIN).
As an employer who doesn’t carry workers’ comp, you CANNOT use the 3 common defenses in court:
- Employee’s own negligence caused injury
- Fellow employee’s negligence caused injury
- Employee knew the danger of job, but accepted it
IN SHORT…going without workers’ comp could COST YOU YOUR BUSINESS!
Uninsured subcontractors ULTIMATELY increase your cost of General Liability, Auto & Work Comp. You can help your own cause and those of your peers by NOT hiring uninsured subs. PROTECT YOURSELF before you allow anyone else on your jobsite!
- A sub damages someone’s property. Are you liable for GL?
- A sub runs over a child at a jobsite. Are you liable for Auto?
- A sub is injured on your jobsite. Are you liable for WC?
If you do not have a certificate of insurance and a binding contract for that sub OR use an uninsured subcontractor-the answer will most like be YES to all scenarios.
If this documentation is not provided and you use an uninsured sub, you will not only be charged additional premium for that exposure, but even worse-your policies could exclude coverage for work performed by uninsured subs.
BEWARE of UNDERinsured subs too! There are many policies that exclude subcontracted work done by subs that do not carry up to certian limits.
IN SHORT…use properly written contracts and obtain certificates of insurance for ALL SUBCONTRACTORS!
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SUBSCRIBERS (Texas Employers who carry Work Comp)
For subscribers, you should know that the Texas Department of Insurance (TDI) and Division of Workers’ Compensation (DWC) has updated its posting notices. As of January 1, 2013, policyholders should use the revised documents, both in English and Spanish, in a common area where employees congregate. Click here to read the official TDI-DWC reminder. Click the following link to view and save the revised notice: WC Notice-English Version-REVISED
NON-SUBSCRIBERS (Texas Employers who do NOT carry Work Comp)
For non-subscribers, there are also revised notices and requirements that should be used and executed to avoid possible penalties and fines. If you have not already received information regarding these revisions, click here to see the new forms effective January 1, 2013 and to read the official TDI-DWC announcement. To file your non-subscribing status quickly and conveniently online with the DWC (as required by LAW), click here.
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In this blog, we will frequently offer tips on how to stay protected and make sure you are fully covered. Anything from pool builder insurance to workmans comp, we are here to help.