Specialized Risk & Insurance Programs for Texas and California Trade Contractors

Many contractors are surprised by how much a single claim can affect their insurance costs and options. Learn why it happens and how risk management reduces long-term impact.

As a contractor, you’re used to managing overhead, but nothing is quite as frustrating as an unexpected bill after a Workers' Comp Audit. We recently helped one of our plumbing clients navigate a complex audit dispute. The initial result was an additional premium bill of $10,220.38. By the time we were finished fighting for them, that bill was lowered by $9,140! Here is how it happened and how you can prevent the same thing from happening to your business. The "Highest Rate" Trap During the audit, the insurance carrier moved all of the client's payroll to a secondary location that carried significantly higher rates. When we asked why, the auditor’s response was simple: since they didn't have specific employee locations, they defaulted everything to the location with the highest rate. The Reality: Standard industry rules (such as those from the WCIRB) state that payroll should be assigned to the location from which employees are actually dispatched or report for work. It shouldn't be based on which location is the most expensive for the carrier. The "CEO in the Field" Error Another common mistake we found was that the auditor had classified the company's CEO as a field worker. Despite the client explaining multiple times that the CEO only worked in the office, the auditor didn't make the change until we intervened. Moving an executive from a "Plumbing" class code (high risk) to a "Clerical" class code (low risk) can save thousands of dollars in premium. How We Won the Dispute Fighting an audit takes more than just a phone call. It requires persistence and technical knowledge. To get the audit revised, we: Challenged the Auditor: We cited specific industry guidance regarding payroll allocation. Provided Granular Data: We worked with the client to pull specific reports from their payroll system to prove exactly where work was being performed. Escalated the Issue: When the auditor initially refused to budge, we took the fight to the underwriting team and the audit dispute department. The Result The carrier finally admitted the error and confirmed the audit was being revised. The client's additional premium was slashed, saving them $9,140. Don’t Just Pay the Bill If you just received a "Final Audit" notice with a large balance due, don't assume the auditor is right. Auditors are human, and they often default to the highest possible cost for the insured when data is unclear. At Contractor Insurance Pros , we don't just sell you a policy and disappear. We are your partners during the audit process to ensure you only pay exactly what you owe. Want us to take a second look at your last audit?