4 Tips to Avoid Surprise Work Comp Premium Audits
April 28, 2017
Author: Ben Droessler
$550,661…the additional premium an Iowa trucking company was forced to pay by the Iowa Supreme Court after their insurance company included owner operator payroll during premium audit. The original policy premium was $1,775. How can you prevent this from happening to you?
1. Know exactly what the insurer requires of you to exclude owner operators from your work comp premium calculation. Not every insurance company has the same requirements. Some require owner operators provide proof of their own work comp policy, others allow for Occupational Accident.
2. Whenever feasible, place your workers compensation with the same insurance company who writes your Occupational Accident and Contingent Liability policies.
3. Avoid buying your workers compensation policy from state “pools”. These arrangements make it very likely you’ll be paying work comp premiums on owner operator payrolls.
4. Create separation by leasing owner operators through a different company not named on your workers compensation policy. While this may create some work for your accountant and attorney, this structure is the best protection from surprise audits. Under this arrangement owner operators may still operate under your existing FMCSA operating authority.
Contact Ben Droessler with Cottingham & Butler’s Contractor Services Team.
Truck Insurance Group, Vice President