http://www.youtube.com/watch?v=BvcMcPLx_wE

There is plenty of new free information you can get by going to our special page for contractors working on insurance costs

We are currently working on ways to avoid allowing quotations to come in at the last minute.  Stay tuned…

Don’t forget to ask me any question at the contractor insurance site

When you need to challenge an audit premium billing in writing here is a link to get the letter started:

response to insurance premium audit billing report 

WHAT DO CONTRACTORS NEED TO KNOW ABOUT PREMIUM AUDITS? Most contractors find they are subject to premium audits from insurance companies for general liability, workers compensation, and sometimes for automobile, and even builders risk insurance policies. This applies most types of contractors, including general contractors, plumbing contractors, heating ventilation and air conditioning (HVAC) contractors, electrical contractors drywall contractors, painting contractors, roofing contractors, and so on.
A premium audit is a review of your business operations, financial reports, and records to determine what to charge you for your contractor liability insurance, workers compensation, or other coverage provided. The objective is to determine the final earned premium for a given policy that was issued on the basis of payroll, sales, subcontracting costs, or other variables.

When policies are issued, the premium is often based on projections you provide for sales or payroll. Your insurance rates can vary based on this information, the audit determines what the correct premium should be based on your actual experience.

An auditor selected by the insurance company conducts the audit. They may be an employee of the insurance company, or an employee of an auditing firm, or even an independent contractor.

THERE ARE THREE TYPES OF PREMIUM AUDITS. Depending on the size of your premiums and your operations you may get one of the following:

Physical Audit — Conducted at your premises or at a secondary location such as your accountant’s office.
Phone Audit — An auditor contacts you over the phone to complete the audit. This type of audit is generally for small- to mid-sized accounts.
Mail Audit — A voluntary audit form with instructions is mailed to you. Mail audits are generally conducted for smaller accounts.

RECORDS AUDITORS MAY ASK TO SEE: Auditors are likely to ask for one or more of the following types of records:

Journals and Ledgers
Tax filings Individual
Pay Records
Time cards
Vehicle titles
Contracts with clients
Contracts with subcontractors
Records of Job Costs
P&L Statements
Balance Sheets

QUESTIONS AUDITORS MAY ASK The auditor will likely ask questions about your records or operations. They may be asking questions to determine if the correct classifications are being applied. If an auditor decides your operations are not correctly classified, it can have an unwelcome surprising result of a large audit billing. Make sure you understand your classifications, and how the boundaries of your particular classifications are defined.

An auditor may ask for a tour of your operations, if they feel it may be necessary to verify correct classifications are being used.

Be familiar with how credits can be applied to your audits.

Insurance classification and rating rules often allow credits to your audit, but your records must be maintained to provide the necessary information in detail and summary form.

When premiums are based on payroll, it is generally defined as Total Remuneration for services performed by an employee.

Remuneration in most states, means money or substitutes for money, and includes:

Bonuses
Commissions
Holiday Pay
Other Money Substitutes
Overtime Pay
Payments made to Profit Sharing Plans
Payments made to statutory benefit plans
The value of board and lodging
Tool Allowances
Wages

Understand the following concepts and definitions to help make sure you avoid overpaying from an audit.

OVERTIME
In most states, the amount attributable to overtime in excess of the regular time pay rate may be deducted. It must be clearly identified in your records. It must be shown separately by employee and in summary by class of work.

DIVISION OF PAYROLL
Division of an individual employee’s payroll to more than one classification is not allowed, except for construction or erection operations and/or certain executive officer classifications. For construction or erection operations, the payroll of an employee may be allocated to each type of work performed on daily time cards. If not, wall wages will be charged against the highest rated classification to which the employee is exposed.

SUB-CONTRACTORS
Avoid becoming responsible for injuries to employees of subcontractor, by obtaining certificates of insurance naming you additional insured. Also, include in your subcontract agreements hold harmless and indemnification agreements in your favor. Auditors look to see if you have adhered to the terms in your policy as respects to your subcontractors. Sometimes audits go bad when the certificates are not in place, or the auditor decides payments to subcontractors are really wages to employees.

AUTOMATED RECORDS
Set up your automated records to provide audiors what they need, and you will find your audits go smoothly, and save you lots of time in the future.

DOCUMENTS YOU MAY BE ASKED FOR AT AN AUDIT
Accounts payable journal and cash dispersements
A/R journal
All vehicle leases, including but not limited to, owner-operator leases
Annual income tax statements
Documents supporting entries in the journals and financial statements
Driver and vehicle logs
Expense journal
Income Statements
Monthly Individual earnings reports
Payroll records including the payroll journal
Quarterly 941’s
Registrations for owned vehicles
SUI’s (State Unemployment Reports - DE 6’s in California)
General and subsidiary sales ledgers
All underlying journals

---

Don Bury is a nationally recognized expert on negotiating with commercial insurance brokers. Author of “Buyers Guide To Business Insurance” in 1993, over $20 million in cost reductions have been delivered so far. Contractors get free help at http://www.contractorinsurancetoohigh.com Don Bury, President Insurance Cost Reduction Services 3663 Camino Bella Rosa Sierra Vista, AZ 85650 Phone/Fax: 800-760-1867 email: donbury@icrs.biz

WHAT DO CONTRACTORS NEED TO KNOW ABOUT PREMIUM AUDITS? Most contractors find they are subject to premium audits from insurance companies for general liability, workers compensation, and sometimes for automobile, and even builders risk insurance policies. This applies most types of contractors, including general contractors, plumbing contractors, heating ventilation and air conditioning (HVAC) contractors, electrical contractors drywall contractors, painting contractors, roofing contractors, and so on.
A premium audit is a review of your business operations, financial reports, and records to determine what to charge you for your contractor liability insurance, workers compensation, or other coverage provided. The objective is to determine the final earned premium for a given policy that was issued on the basis of payroll, sales, subcontracting costs, or other variables.

When policies are issued, the premium is often based on projections you provide for sales or payroll. Your insurance rates can vary based on this information, the audit determines what the correct premium should be based on your actual experience.

An auditor selected by the insurance company conducts the audit. They may be an employee of the insurance company, or an employee of an auditing firm, or even an independent contractor.

THERE ARE THREE TYPES OF PREMIUM AUDITS. Depending on the size of your premiums and your operations you may get one of the following:

Physical Audit — Conducted at your premises or at a secondary location such as your accountant’s office.
Phone Audit — An auditor contacts you over the phone to complete the audit. This type of audit is generally for small- to mid-sized accounts.
Mail Audit — A voluntary audit form with instructions is mailed to you. Mail audits are generally conducted for smaller accounts.

RECORDS AUDITORS MAY ASK TO SEE: Auditors are likely to ask for one or more of the following types of records:

Journals and Ledgers
Tax filings Individual
Pay Records
Time cards
Vehicle titles
Contracts with clients
Contracts with subcontractors
Records of Job Costs
P&L Statements
Balance Sheets

QUESTIONS AUDITORS MAY ASK The auditor will likely ask questions about your records or operations. They may be asking questions to determine if the correct classifications are being applied. If an auditor decides your operations are not correctly classified, it can have an unwelcome surprising result of a large audit billing. Make sure you understand your classifications, and how the boundaries of your particular classifications are defined.

An auditor may ask for a tour of your operations, if they feel it may be necessary to verify correct classifications are being used.

Be familiar with how credits can be applied to your audits.

Insurance classification and rating rules often allow credits to your audit, but your records must be maintained to provide the necessary information in detail and summary form.

When premiums are based on payroll, it is generally defined as Total Remuneration for services performed by an employee.

Remuneration in most states, means money or substitutes for money, and includes:

Bonuses
Commissions
Holiday Pay
Other Money Substitutes
Overtime Pay
Payments made to Profit Sharing Plans
Payments made to statutory benefit plans
The value of board and lodging
Tool Allowances
Wages

Understand the following concepts and definitions to help make sure you avoid overpaying from an audit.

OVERTIME
In most states, the amount attributable to overtime in excess of the regular time pay rate may be deducted. It must be clearly identified in your records. It must be shown separately by employee and in summary by class of work.

DIVISION OF PAYROLL
Division of an individual employee’s payroll to more than one classification is not allowed, except for construction or erection operations and/or certain executive officer classifications. For construction or erection operations, the payroll of an employee may be allocated to each type of work performed on daily time cards. If not, wall wages will be charged against the highest rated classification to which the employee is exposed.

SUB-CONTRACTORS
Avoid becoming responsible for injuries to employees of subcontractor, by obtaining certificates of insurance naming you additional insured. Also, include in your subcontract agreements hold harmless and indemnification agreements in your favor. Auditors look to see if you have adhered to the terms in your policy as respects to your subcontractors. Sometimes audits go bad when the certificates are not in place, or the auditor decides payments to subcontractors are really wages to employees.

AUTOMATED RECORDS
Set up your automated records to provide audiors what they need, and you will find your audits go smoothly, and save you lots of time in the future.

DOCUMENTS YOU MAY BE ASKED FOR AT AN AUDIT
Accounts payable journal and cash dispersements
A/R journal
All vehicle leases, including but not limited to, owner-operator leases
Annual income tax statements
Documents supporting entries in the journals and financial statements
Driver and vehicle logs
Expense journal
Income Statements
Monthly Individual earnings reports
Payroll records including the payroll journal
Quarterly 941’s
Registrations for owned vehicles
SUI’s (State Unemployment Reports - DE 6’s in California)
General and subsidiary sales ledgers
All underlying journals

---

Don Bury is a nationally recognized expert on negotiating with commercial insurance brokers. Author of “Buyers Guide To Business Insurance” in 1993, over $20 million in cost reductions have been delivered so far. Contractors get free help at http://www.contractorinsurancetoohigh.com Don Bury, President Insurance Cost Reduction Services 3663 Camino Bella Rosa Sierra Vista, AZ 85650 Phone/Fax: 800-760-1867 email: donbury@icrs.biz

To really save money contractors insurance, take control of your loss runs.

This article is one of a series of tips to help business owners save large amounts of money on business insurance. Today, we are going to talk about loss runs, which are vitally important to any buyer of business insurance, who wants to save money. They are also known as policy history reports, but are more commonly called loss runs. This information applies to all forms of business insurance, including contractors general liability insurance.

What are loss runs? A loss run is simply a report from an insurance company showing claims you had for a particular policy. It should show the policy number, effective dates, and list for each claim a claim number, amount paid, amount reserved, amount incurred. It should show premium paid for the policy also.

Why are they important? Failure to obtain them at the right times is a primary cause for overpaying large sums of money. No one will accurately quote your business insurance without currently valued loss runs.

Why is getting loss runs often difficult? Brokers know their clients cannot get competitive quotations without them. To avoid unwelcome competition, they rarely give them to clients voluntarily. Brokers often try do delay handing over loss runs to clients, and use the time to capture as much control of your renewal as possible. To further complicate matters, brokers often cannot access loss runs for policies you purchased from other brokers. The critical job of capturing currently valued loss runs 90 days in advance of your renewal routinely gets mishandled. This ends up costing you money and creating unnecessary emergencies as your renewal approaches.

What is the solution? Collect and organize the information necessary to secure your loss runs. You absolutely need a spreadsheet listing all the policies you have now, and all those you’ve had in the past 5 years. The table headers (in a row across the top) are as follows, along with explanations after the dash:

Inception Date - what date did the policy start?
Expiration Date - what date did the policy end?
Insurance Company - Exact name of insurance company
Policy Number - every policy has a number. Record it accurately.
Premium - use the final audited premium if you have it.
Total claims paid - amounts actually paid by the insurance company
Total claims reserved - amounts not paid, but set aside in anticipation of being paid
Total claims incurred - the sum of paid and incurred.
Type of Coverage - Liability, Auto, Property, Excess Liab, Professional Liab, Workers Comp
Loss Run Contact - Name, phone, fax, email address of person who publishes the loss run.
Loss Run Valuation Date.- The date the loss run report says it is valued.

A good way to get this to happen is to ask your broker for it. If your broker cannot give you this, declare an emergency. This is absolutely vital information your broker needs to effectively run your renewals. Insist that your broker put this together and deliver it to you. It is best to do this long before your next expiration date.

You want the policy history rows sorted first by line of coverage, then by inception date. That way you will see 5 years for each line, in neat chronological order. For each line, you can sum the premiums and the claims to see how much money you are making the insurance companies. It is usually a lot.

Summary: Failure to get complete loss runs on time is a primary reason for overpaying for business insurance. No one can accurately quote your insurance without currently valued loss runs. This means you have to get them every year, 60 to 90 days in advance of your expiration dates. Keep organized as I am describing, and you will avoid the following expensive mistakes:

1) Letting your broker think he or she has a monopoly on your renewal. If you have your loss runs, that means you can get quotes from anybody. If you don’t have them, you can’t.

2) Having a last minute crisis, because of a missing loss run. This can result in a quote not happening that could have saved you a lot of money.

3) Getting ignored by underwriters, who view your applications for quotations as incomplete without the loss runs.

Get more information at Contractors General Liability Insurance Cost Reduction

Smart and wealthy building contractors are the ones who associate with winners in their specialties, for good reason. They’ve come to realize they will never live long enough to learn all they need to know by themselves. They see the value of sharing information and comparing notes. They skip long, expensive learning curves suffered by the do-it-yourselfer’s. As a result, they get smart much faster, and avoid making costly mistakes that happen using only trial and error.

For example, consider commercial liability insurance for general contractors. Buyers are isolated, and the insurance industry likes it that way. It is nice and complicated, and there are plenty of ways to spread fear, to keep contractors from doing much about it. Your job as a buyer is to stop asking questions, and pay the premiums. Isolated contractors try to ask intelligent questions, but they have no benchmark idea of what the best deals look like. They have very limited power.

I happen to know that rates are all over the map for contractors. General contractors focused on residential remodeling are a good example. I’ve seen premium rates range from 0.7% of sales to over 3%. As I collect more and more examples, I finally start to see into the murky marketplace. Turn on the lights, and it is easy to see what to demand.

Contractors are reluctant to show their insurance policies to their competitors for good reason. They don’t want to show their numbers for sales and payroll for one thing. Also, they are not all that confident they have to best deals, and don’t want to feel dumb. Every time I’ve seen contractors pull out their policies and compare them, there are always a good percentage wondering how the best deal on the table came to be that way. 80% of them discover they’ve been overpaying large sums of money.

What if every contractor in California where to regularly submit their results with the insurance industry into an ongoing survey, in exchange for access to the collective intelligence? We’ve been informally running such a survey for the past several years. If you’d be interested in participating, send me an email at my address below.

Don Bury is a nationally recognized expert on negotiating with commercial insurance brokers. He co-authored “The Buyers Guide To Business Insurance” in 1993, and operates Insurance Cost Reduction Services from his home in Arizona.

Contractors can get plenty of free information at Contractor Insurance Cost Reduction

Don Bury, President
Insurance Cost Reduction Services
3663 Camino Bella Rosa
Sierra Vista, AZ 85650
Phone/Fax: 800-760-1867
email: donbury@icrs.biz

web: Commercial Insurance Cost Reduction

check it out here:

All About Contractor Insurance Cost Reduction/

an exciting new site is being launched for contractors focused on increasing profits

Click here to check it out:  www.myconstructionbiz.com

an exciting new site is being launched for contractors focused on increasing profits

Click here to check it out:  www.myconstructionbiz.com

This article is up for all to see, so tell your friends.
Commercial Insurance Auction“>http://ezinearticles.com/?id=1194590

For those working on saving money on commercial insurance; who appreciate the importance of controlling the renewal cycle, we are working on setting up a cool new support site:

http://www.commercial-insurance-auction.com

Hi all,

I’m building a site just for people buying contractor insurance.  Here the link:

contractor insurance

Ask your broker 5 potent questions, and be amazed as they lower your rates and improve your coverage.You can save a lot of money if you know what questions to ask your insurance broker.

Getting the 5 questions answered puts you in a very strong position to get fantastic deals on your insurance. This one step will open your eyes to how valuable it is to apply a few sensible controls to your insurance purchasing cycle. I’ve made a career out of delivering cost reductions to people faced with buying business insurance.

Get the 5 questions free at www.InsuranceCostReduction.com

When I read Liberty Mutual is working on buying Safeco for $6.5 billion in cash, I really wasn’t all that surprised.  But where do such large sums of money like that come from?  Ultimately, it comes from people like you and I paying excessive premiums to big insurance companies.  It seems pretty clear to me that it is dumb not to negotiate with them as intelligently as possible.  I thought it was true in 1993 when I first wrote my book, and I’ve seen savings delivered exceed $20 million since then.  Do you think it is reasonable to question the prices and terms they present you with?  Let me know.

If you are running a construction company in the remodeling or restoration lines, be sure you know about Les Cunningham and Business Networks. Les has built a terrific business model of success breeding success, and he works really hard at it. I owe him because he has kindly exposed our services to his clients, and I want to be sure my readers know about him. To Check Out Business Networks, click here

Check out this kind reader’s review I ran across on Amazon - “After reading this book, all I can say is that it should be required reading for every company controller, accountant, and office manager in the country. It unravels the mysteries behind how business insurance works, how brokers and insurance companies exploit people’s lack of knowledge of the system for their own gain, and gives you specific tools, techniques and instructions for taking steps to create massive reductions in your insurance bill. This is definitely the book that the insurance industry does not want us to see, and I’m definitely putting the wisdom I’ve gained from reading it to good practice in my own business.”

We just unleashed version 1.0 of an email reminder service, designed to send emails to you at the right times, to remind you to take actions during the year that tend to save money on insurance. These are things I try to remember to do for my clients, even though the calendar is whizzing past us so rapidly.

For example, we need to be reminded when to order loss runs, when to update renewal specs, when to ask brokers which markets they want to reserve. A good email sent at the right time can be worth a lot of money. At each of the events, we need certain documents and information to help us execute the action with minimal time or effort. This service is designed to give you what you need, when you need it.

If you depend on your office manager or other staff to stay on top of your renewal cycle, it will really help them too.

I’m going to keep adding assets to this service for your benefit. Please let me know of anything that you think would make this more helpful to you.

To launch the service, click here.

You will be taken to a form asking for your expiration dates, and a few bits of basic information. If you are not sure of your expiration dates, you can guess for now, and provide more precise information later if you like.

Feel free to pass this along to any friends who might want to check this out!

Cheers!

Don Bury

Everybody knows you need your loss runs to get quotations. Insurance companies should send them to you automatically, in much the same way banks send you tax reporting information every year.

CLICK HERE for my video on this, and to read all about it. Do you agree?

Have you ever heard yourself complaining you don’t have enough time to do everything your business requires? You are working on estimates, sales, running jobs, getting materials, billing customers, doing paperwork, and on and on.

While all this is going on, the insurance industry is happily sucking dollars out of your bank account. Each day you are getting closer to your next insurance renewal, which is going to be about as much fun as the last one. You are too busy to do much about it.

You don’t have a system in place to control insurance costs, because that is about the last thing on your list. Unless you run out of money.

You can plug ICRS into your organization, and immediately gain an insurance cost reduction system, along with people to operate it for you. We are so sure we will make you money, we are happy to work on a percentage-of-savings-delivered basis. That’s right. We do the work, deliver measurable savings, the get paid a percentage of what we save you. You are the judge, and you pay us when you agree we saved you the money. (A modest refundable deposit is required.)
So I’m inviting you to make an executive decision - to delegate the task of controlling insurance costs to us, and hold us accountable for delivering results. Pay us when we perform. We will “get ‘er done”, and you will be free to do what you do best.

Hope this helps!

Don Bury