THURSDAY, FEBRUARY 10, 2022
2022 Insurance PRO TIP #6: ATTN General Contractors. Always remember that your Work Comp policy and sometimes your General Liability policy are rated based on your payroll.
Work Comp is "dollar for dollar". This means on your annual audit, if your payroll is higher or lower than the payroll on your initial application, you will be either charged more in premium (higher audited payroll) or given a return of premium (lower audited payroll).
General Liability premium may be 100% earned at the time of policy binding. This is huge if your payroll lowers at renewal and your agent doesn't lower your last policy period's payroll numbers.
E.g. If you have $750,000 in payroll during your 2021 General Liability policy period and the projection lowers to $500,000 and your agent didn't change that value, you will pay for the higher payroll and unlike your Work Comp policy, you may NOT see a refund. This is what's referred to as 100% earned premium. However, if your payroll or sales, if audited, goes up you will still have to pay the prorated increase in premium based on a higher than reported actual payroll.
This may be a complex concept for most starting contracting companies to realize. We are more than happy to have a conversation with you if you ever have any questions about your General Liability or Work Comp policies, how they are rated and what your exposures are after policy binding.
Posted 4:23 PM