Shock audits for Workers Comp insurance happen all over the U.S. I know, because I get calls and emails almost every day from some small business, somewhere in the United States, that's been clobbered with one of these Shock Audits.
This South Carolina small flood restoration business bought a Workers Comp policy for around $1,000.00. Now they have an audit bill for $77,000.00.
This is for a policy that didn't even last a year. The insurance company cancelled them after eight months when the policyholder dared question a change to the policy that suddenly caused a $28,000 bill for additional premium.
Fortunately, my initial review finds that an awful lot of that audit bill can be removed, once all the various mistakes the insurer made are corrected. And there are multiple mistakes, mainly over classifications but also about independent contractors being improperly included.
The insurance company did an audit for this policy--sort of. Judging from the results, it was an audit in name only. No actual effort appears to have been expended to determine the actual proper classifications and payrolls--the insurer's people just quickly and conveniently applied an extreme, worst-case scenario to every potential question, billed that out, and moved on to the next victim--err, policyholder.
But these errors are very fixable. And they will be.
As I often say, in a perfect world, I should have to be doing something else for a living.
We do not live in a perfect world, alas.
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