I'm being AUDITED! What does that mean?
Audits do sound scary but it's the carrier coming in to make sure that their risk was covered adequately. For example, at the beginning of the year you projected that your company was going to make $150,000 but you had a banner year and at the end of the year you actually made $350,000. There is actually a gap in liability there. You have opened yourself up to a higher liability than you originally thought.
What the company actually does is to come in and says this was what was projected, but tell us what the actual gross receipts or payroll amounted to at the end of the term. Once you give them those figures and they find out you actually did better than expected, there will be an increase in premiums. This does annoy a lot of people but it's important to know as you grow as a business your liability does increase. Someone who does $1 million of work per year does open themselves up more than someone that does $500,000 per year.
The company has to gage their risk adequately. Just because the year is over does not mean a claim does not arise from that year. Most companies do require an audit once a year, especially for a new policy or company.
A lot of times the disconnect happens because the agent is not explaining this properly (which means you didn't use Quote Texas Insurance!). The main thing is that the information you gather for the general liability policy is a guess. If you want to curb this, call your agent and update the information so you don't have a big adjustment if you do get audited.
Concerns about an audit? Call Quote Texas Insurance at 844-402-4464 or complete our contact form for additional information.
