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General Liability Insurance Premium Audits Definition

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General Liability Insurance Premium Audits Should Be Reviewed By Employers

General liability insurance premium audits should be reviewed along with the workers compensation premium audits.    This type of audit usually occurs when the workers comp audits are being performed each year.

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Earlier this week, I wrote an article on what external information premium auditors examine for workers comp audits.  I could have easily added in the general liability audits.  Make sure that you review that article.

The basic standard definition is:   According to Chron.com

A general liability insurance audit occurs when an insurance agency examines the payroll records and income statements of a policyholder to determine if that policy represents an accurate rating of the company’s exposure to liability. A professional auditor, either from the insurance agency or from an independent office, performs the audit and assesses the company’s exposure. The results of the audit do not determine a company’s value or its tax rate, but they establish its level of protection from liability claims.

We have been offering reviews of these audits for over 5 years.   We introduced that service in 2013.

If you as an employer question your workers compensation audit, the general liability audits go “hand-in-hand.”   You may possibly want that audit reviewed in addition to the workers compensation audit.

The records required for general liability insurance premium audits are basically the same material.  However, the classification codes are not from the same group.   Except in rare cases, the codes are totally different – usually longer.

Very often we are asked to only look at the workers compensation audits and asked to ignore the general liability audits.   Recently, with the employer profit margins (in many industries) shrinking, this area has generated more interest.

This is not an ad for our services.  I wanted to call our readers’ attention to this oft ignored area.   Please feel free to contact us if you have any questions on general liability insurance premium audits.

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6 Responses

  1. We have a large framing contractor who is having great trouble with the way his debris removal crew is classified – they have to be included in the carpentry payroll which as you may know is a much higher rate. This contractor has a fetish about a clean jobsite. His debris removal staff do nothing but clean up, sweep and haul scraps of wood etc to a trash site. They do nothing in the way of using a hammer or whatever a carpenter does and frankly lack such skill.

    Do you have any suggestions?

    Thanks for your timely tips including ideas about audited payrolls for GL

    Dick Coffey

  2. Dick, there are so many deviations from the carpentry codes. The states that your client operates in would be the main determining factor. There are classification codes for debris cleanup that may possibly fit. Then again, the cleanup codes are so narrowly defined that it is tough getting the employees out of the carpentry codes. Those codes are all-encompassing. I would need to see more info before I could see if the debris removal can be placed in a different class code. Thanks for commenting.

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

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