R&R Insurance Blog

We are frequently asked "Who is covered under our commercial general liability policy?"

Reading your commercial GL policy and determining who coverage applies to can be confusing. The list below will more clearly outline who your coverage applies to:

• Individual: Named individual and their spouse
• Partnership or Joint Venture: Named partnership, named joint venture, partners, members, and their spouse
• Limited Liability Company: Named LLC, members, and managers
• Organization (Corporation): Named entity, executive officers, directors, and stockholders
• Trust: Named trust and trustees

In addition to the list above, there may be others who are afforded coverage under your policy with differing circumstances. In order to determine any gaps, contact your KnowledgeBroker.

For many business owners, premium audit paperwork, auditors, or phone calls to complete an audit occur annually. For those business owners with employees, this is a guarantee. Every year, like clockwork, you will be required to report your employee payroll to your Workers Compensation insurer. And if the audit isn’t complied with, the carrier maintains the right to increase the payroll on your insurance and charge additional premium for it.

So why does an audit have to be completed every year? In order to understand this, it is important to know what exactly an audit is. When you purchase coverage, especially Workers Compensation, you are providing an estimate as to the annual wage you think you may pay an employee, or your gross sales for that time period for General Liability coverage. Your premium for the year is then based on that estimate. When the policy term ends and the audit is completed, it is an evaluation of the estimated payroll vs. what was actually paid out, or the estimated gross sales vs. actual. So if the estimate at the beginning of the year was higher than the audited figures, you may be eligible to receive a refund. And if the estimate was a slightly low, additional premium will be charged accordingly.

The audit process helps insurance carriers determine the final premium for your policy based on actual exposures. It also helps the carrier determine that your business is classified correctly – taking into account all of your exposures and operations. In addition, it may help determine any potential gaps in your coverage for additional operations or exposures that may have come up throughout the year. It is a service that helps guarantee you only pay the premium you should be paying. The premium audit process is also a condition of the policy when you agree to purchase it – you give the insurance carrier the right to examine your books and records for audit purposes.

Whether it is a physical audit, a phone call, or paperwork to complete, the audit is designed not only to benefit the insurance carrier, but the client as well. Being charged fairly for your coverage is important and making sure that you are protected adequately is vital for the success of your business.

For more information on the premium audit process, contact a knowledge broker at R&R.