Your contracting business is growing and you are now using subcontractors to perform smaller tasks outside of your expertise. You have both General Liability and Workers Compensation in place. Both policies go through an annual audit where you send in payroll records, profit and loss statements, and other sales register type documents. For years, the process was simple: You made X dollars per year, and the policy could be expected to increase or decrease in premium based on whether you made more or less money in a given year. Now, it is different. The steps below will help you start NOW and the right way so that you can avoid a painful, expensive, and frustrating annual audit. The key is to start now, and to stick to these rules regardless of how much your business may grow. First, you MUST only use subcontractors who carry their own insurance. Without this, you will be charged a premium at audit time to reflect the amount of work they perform for you. You are essentially purchasing their insurance for them. Suddenly, the subcontractor who was less expensive than others is no longer such a bargain. I reiterate that you MUST without exception only use insured subcontractors. They must carry both General Liability and Workers Compensation. Read More |
