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Construction Insurance Bulletin

2015 Begins with a Self-audit, then Spring Cleaning

By February 2, 2015No Comments

Even professional football players need coaching about fundamentals. Observe the three point stances in the second quarter of any game.


Payroll determines base premiums for contractor’s key coverage: workers’ compensation and completed operations liability. Your company produces annual payroll recapitulations with summary reports for W-2s and 1099s at every year end.


Review estimated payroll given to your carriers for these policies. Does the comparison summary suggest a large additional premium or perhaps a return to your firm? If you discover a significant drop in payroll, which implies a significant decrease in premium, ask your agent to review the insurance carrier selection in light of this reality.


Some carriers prefer larger workers’ compensation or liability accounts and may choose to non-renew based on premium size. Check on this compatibility as part of your spring cleaning to-do list.


Calendar quarter expiration dates make sense since tax records get filed at these times. Self-audit becomes easier as do insurance company audits. If you do not now enjoy a calendar quarter expiration date, put that on your spring cleaning to-do list.


Review the 1099s. Do you have insurance certificates on file for these subcontractors? The insurance companies will charge premium for undocumented subcontractors. Check each one as an item on your list.


Check your contract status with each 1099 recipient to assure proper loss transfer language is in place.


Review OSHA logs, lunch-pail safety meeting, and similar in-house safety and injury reporting documentation for completeness and accuracy. Request loss runs from your insurance carrier. Does your information agree with their claims estimates?


Your experience rating is based on their estimates or “loss reserves”. Ask about any discrepancy in expectations.


Check your safety equipment such as fire extinguishers and first aid kits to assure they are up-to-date and functional. Do not delegate this task. Check them. This is life or death, not profit or loss.


So to recap your spring cleaning list:

• Review your W-2 and 1099 summaries and double check the associated documents.

• Review safety and loss documentation.

• Check life safety equipment personally.


Spring cleaning provides a pathway to a safe and efficient new year.