Insurance Scam

[ted mcmeekin]

Last fall we changed carriers after 9.5 yrs because of increasing premiums. We then were advised old carrier had to do audit (agent called it randoim but may be routine after cancellation). They asked for last years receipts and then sent unbelievable bill. Basis was the difference in receipts estimated in original policy and last year. The rate they used for just liability portion resulted in premium double what they billed for total policy last year. Had they billed at that rate (current recipts double estimate of 9 yrs ago) at any time we would have cancelled immediately. The new policy is about half the "liability only" amount they sent.

Do we have any recourse?

Ted

 

[pitzerwm]

Read your contract, but usually they ask for your gross every year. The way I would take is that if they haven't been "auditing" annually, and how they arrived at the new amount, it should be the same base price only multiplied by the new amount "per thousand" of revenue. You could also say that the salesman was not forth coming on the plan, firing off a letter to the insurance commissary asking for an audit on the companies policies.

 

[rph9168]

From my experience insurance companies only request an audit when you either question their rate or you let them know you are canceling. I have never had them do an annual audit which is what I believe they are supposed to do. I often wondered what would have happened if I had a claim and they audited.

 

[2Biz]

What kind of insurance do you have that charges you based on Income/Reciepts and not building/equipment and liability? Sounds fishy to me.
Also, if they didn't charge you while you were paying for the policy/insurance, I would think it would be their loss....Not yours. Especially after you cancel. That would be like cancelling your cable or phone and then they come along afterwards with all these additional charges they said they forgot to bill you for??? It doesn't make sense.

I have insurance on my building, equipment and liability. My insurance premiums are not based on income....

 

[ted mcmeekin]

Contract says they have right to audit within 3 yrs of cancellation. They did not audit until we cancelled. Just talked with insurance commissioner who will send us request for info for them to investigate. If they used the rate they just sent for all 9 years (rather than last year) it would be many thousands of dollars. I know that rate is totally non competitive--Commision will evauate reasonableness of rate which should make them sorry they tried to get a pound of flesh after cancellation.


Yes they use gross receipts to determine liability premium.

Ted