Colsa Insurance Agency, Inc. Blog
Linda is a junior partner in a law firm and drives a car that the firm owns and insures. The firm's auto insurance covers her as a partner and she doesn't own another car, so she sees no need to have her own policy.
Most of the time, this is not a problem. However, spring break comes and she takes her kids to DisneyWorld. She rents a car at the Orlando airport and never gives a thought to whether her firm's insurance will cover her if she has an accident with the rental. In this case, a phone conversation with the firm's insurance agent would have been a great idea.
While driving to her hotel one night, Linda rear-ends a new Lexus. The damage to the other car is extensive; Linda looks to her firm's auto liability coverage for the cost of repairing it.
The ISO Business Auto Policy covers the person or organization shown in the policy declarations (the information page at the beginning.) In this case, the name shown in the policy Declarations is the name of Linda's firm.
The policy goes on to say that, for liability insurance, the firm is an insured and so is anyone else using, with the firm's permission, a covered auto the firm owns, hires or borrows, with some exceptions.
Unfortunately for Linda, the firm didn't rent the car; she did … in her own name. Consequently, the firm's insurance will not cover her liability for this accident. She will be forced to pay for it out of her own funds.
However, there are a couple of policy endorsements that her firm could have purchased that would have solved Linda's problem.
Drive Other Car Coverage - Broadened Coverage for Named Individuals
The insurance company will require the insured to list the names of one or more individuals on the endorsement.
The change extends several of the policy's coverages so that they apply to the listed individuals and their resident spouses. This endorsement comes with some significant limitations:
Individual Named Insured
An alternative to this endorsement is to list individuals' names in the policy declarations along with the firm's name and attach an endorsement called Individual Named Insured.
The endorsement covers the individual listed in the declarations and automatically covers the person's resident spouse and family members. It also covers these individuals should they injure another of the firm's employees.
These policy changes affect several coverages, including liability, uninsured motorist, medical payments, and physical damage.
If you are considering doing this, you should consult with us to discuss the endorsements' details and identify the one that will best insure the concerned individuals. With the right coverage in place, Linda can enjoy her vacation without having to worry about who will pay for the fender-bender.
No company owner wants to undergo a workers' compensation audit, but they are a fact of life if you run a business and have employees.
Unfortunately, many audits don't go smoothly and sometimes your insurer may make mistakes. Missouri-based Workers' Compensation Consultants, which helps employers through the workers' comp audit process, recently listed the 10 most common audit mistakes that insurance companies make.
The list highlights a common problem and how you can detect the mistakes to avoid being stuck with a massive audit bill. Insurance companies allow you to review the audit with your broker. If you notice that you have received an audit bill that is obviously overstated, you should contact us.
Here are the things to look for when reviewing an audit by your insurance company:
Wrong class code - Misapplication of job classifications occurs in many workers' comp audits. With hundreds of job classes to choose from, mistakes can happen. Talk to us and review your old policies to see if any of your class codes have changed.
X-Mod is changed - After your insurer finishes the audit, it will use the information to calculate your premium. When that happens, it has to include your X-Mod to get the right rate. But sometimes the insurer may use an incorrect X-Mod. Check carefully.
Subcontractors are counted - Sometimes insurers will include subcontractors as employees, which results in a new audit bill to account for the additional "employees." But if they are genuine subcontractors, they should not be counted. Often, uninsured contractors will be included as employees. Make sure to use insured contractors only.
Disappearing credits - Most policies will have some sort of premium credits or other modifiers. Sometimes during audits, the insurer will remove them when recalculating the premium they think you owe. Watch out for missing credits and other modifiers if you get an audit bill, like:
Audit worksheets missing - If the auditor fails to provide you with audit worksheets, which are used to compile your payroll and other audit information, you should ask to check their work. They will provide you with the information you need to carry out such a check.
Your rates changed - The rates you are charged at the beginning of your policy period must remain the same for the entire policy period. If your base rates have changed, the insurer may have made a mistake.
Separation of payroll - Depending on your industry, you may or may not be able to split your employees' payroll between job classifications (like cabinet installers and sheetrock hangers). This is a pinch point when errors can occur. If the auditor says you are not allowed to split job classifications even though you have in the past, your audit may be in error.
Unexpected large premium due - If you get a significant bill for your insurance company after your audit, the auditor may have made mistakes, particularly if you know that your employment has remained relatively stable and you've had no significant claims, if any. If it seems out of whack, call us.
Payroll data doesn't match - If there is a discrepancy between your payroll data and what you see on the audit, a mistake may have been made. Try to match the payroll on the audit with that generated from your accountant. If the insurer made a mistake, you could end up paying for phantom payroll numbers.
No physical audit - There are three types of audits:
The mail and phone audits are prone to errors since neither you nor your staff likely have any experience in premium auditing. If you have a big bill after a mail or phone audit, mistakes could have been made.