Mountain View Insurance Services Blog
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 By Cole Rarrick President, Mountain View Insurance Services
You did the work. You paid your premiums all year. And now your carrier is sending you a bill for thousands of dollars you didn't budget for. Welcome to the audit. Most contractors know audits exist in theory. Few are prepared for what actually shows up. Here's what's catching people off guard and what you can do about it before the auditor calls. Your subcontractors can become your problem When you hire subs, your carrier wants to know how much you paid them. That's because if a sub doesn't carry their own insurance, your policy may end up covering them by default. Here's where it gets expensive. If you don't have a certificate of insurance on file for a sub, the carrier will typically pick up their full payment as an auditable exposure. Not just labor. Labor plus materials, combined, as one number. That landscaping sub you paid $40,000 to? If you can't produce their COI, that $40,000 gets counted as your exposure and you get charged on all of it. Some carriers will let you strip out materials if you have detailed records separating labor from materials. Most contractors don't keep it that clean. One line item on an invoice is the norm, and one line item means the whole amount is fair game. The fix is straightforward: collect a certificate of insurance from every sub before they set foot on your job. Not once a year in January. Every project, every time. A sub can have active insurance in January and get canceled for non-payment by June. The COI you collected six months ago doesn't protect you today. Best practice is to check every project. If that feels like too much process to build yourself, ask your broker to help you set up a simple system. It doesn't have to be complicated, and it's far less painful than paying an audit bill for someone else's work. The double whammy you don't see coming Here is the part that frustrates contractors most. An audit isn't just about last year. Say your audit closes and the carrier determines you owe an additional $8,000 because your payroll came in higher than estimated. You write the check and assume you're done. You're not. The carrier now has real numbers on your operation, and they update your current policy to reflect them. If you have nine months left on your policy period, your remaining payments increase to spread the updated payroll across those months. You pay for the past and the future adjusts at the same time. That's the double whammy. Most contractors only brace for one hit and get surprised by the second. If you're on ACH, pay extra attention. The carrier isn't going to send a separate invoice and wait for you to respond. They'll automatically deduct the audit balance and the new payment amount directly from your account. If your cash flow is tight, that can catch you off guard fast. When you add new trades mid-year Your policy is built around what you told the carrier you do. If that changes, your premium should change with it, and the audit is how the carrier finds out it didn't. A good example is a landscape contractor who starts picking up concrete flatwork, masonry, or paving. Those aren't the same risk classification as general landscaping. If you're running crews doing meaningful amounts of that work and it wasn't on your original submission, the auditor will find it. The rate for the new trade applies, retroactively, to the work you already did. This isn't about hiding anything. It's about making sure your broker knows your scope before the underwriter figures it out themselves. The conversation is much easier when you're the one bringing it up. One thing the audit doesn't touch: your umbrella This one actually cuts both ways, and it's worth knowing. Your umbrella policy generally doesn't participate in the audit process. If your payroll went up and you owe money on your general liability or workers' comp, the umbrella doesn't add to that bill. But if your payroll went down and you're expecting a refund, the umbrella won't contribute one either. It sits outside the audit entirely. Switching carriers doesn't erase the audit A lot of contractors switch insurance companies because they found a better price. That's a legitimate reason to move. But one thing doesn't go away when you leave: the final audit from your old carrier. It doesn't matter whether you left mid-term or at renewal. Your previous carrier will still conduct a final audit for the period you were with them. That bill can show up months after you've moved on, and if you weren't expecting it, it hits like a surprise you thought you'd avoided. There's another risk with switching that's easy to miss. A new carrier might classify your trades in a way that looks favorable at quote time. You assume you're saving money, you bind the policy, and the year goes on. Then the audit happens. If your operation involves gray-area work, masonry that could read as concrete, concrete that could read as flatwork, the new carrier's auditor may land on a different classification than what you were originally quoted. You saved money on paper and gave some of it back at audit time. None of this means switching carriers is a bad idea. It means you should ask your broker exactly how the new carrier is going to classify your work before you bind, not after. If a large audit bill shows up One last thing worth knowing: you don't always have to pay a large audit balance in one shot. Most carriers will work with you on stretching the payment out, typically at least three months, sometimes longer. It requires your broker to make the ask, but it's negotiable more often than people realize. If you're staring at a number that doesn't fit your cash flow right now, call your broker before you assume you have no options. Questions to bring to your broker before your next audit
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 Your Truck Got Totaled. Now What About the $20,000 in Tools That Were Inside? Cole Rarrick | Founder, President. Mountain View Insurance Services This is the kind of thing nobody thinks about until it happens, and by then it is too late to fix. Picture it. You are standing in a parking lot, staring at where your work truck used to be, trying to figure out how you are going to finish Monday's job. You are already mentally past the truck. You know you have auto insurance to handle the vehicle, even if the depreciated payout makes you grumble. What stops you cold is the next conversation, the one where you find out your tools are a completely separate problem. So let's talk about that problem before it becomes yours. The auto policy covers the truck, not what's in it Your commercial auto policy is built to cover the vehicle. The metal, the engine, the seats. If it gets stolen or totaled, the carrier pays out the actual cash value, which is almost always less than you think it should be because of depreciation. That part stings, but most business owners at least understand the concept. What surprises people is what happens to everything that was inside. The table saw, the impact drivers, the laser level, the ladders strapped to the rack, the bins of bits and blades and fasteners. None of that is part of the auto claim. The auto policy does not care about your tools. It covers the truck. And before you ask, no, your property policy will not pick up the slack either. A standard commercial property policy generally covers things at your location. Once your tools leave the building and head out into the world, they fall into a coverage gap. Enter the inland marine policy The fix lives inside a policy called inland marine. The name is confusing because it has nothing to do with boats or oceans. Inland marine is the bucket of coverage built specifically for property that moves around. Tools, equipment, materials in transit, stuff at a jobsite, stuff in your vehicle. That is what inland marine is designed to handle. If you own tools and you take them anywhere other than your shop, you need an inland marine policy. Full stop. Some people call it a tools and equipment policy or a contractor's equipment policy. Same idea. The second surprise: per item limits Here is where the next gut punch lives. You think you have a $20,000 inland marine policy, and you assume that means $20,000 of coverage when something goes wrong. Then a claim happens, and the carrier says, sure, here is $500 per tool. That is not a typo. A lot of these policies have a per item sublimit. The total limit might be $20,000, but if any single tool is capped at $500, your $1,400 track saw just became a $500 track saw. Your $1,800 rotary hammer just became a $500 rotary hammer. You see where this is going. The fix is simple. You raise the per item limit, or you schedule the expensive tools individually so they are covered for their actual value. For high dollar items, scheduling is the way to go. The carrier knows exactly what the tool is, what it is worth, and you do not have to argue about it later. Here is the best part. Fixing this is cheap and easy. Bumping a per item limit or scheduling a few pricey tools usually costs almost nothing relative to what you would lose in a claim. It is one of the easiest wins in a commercial insurance program, and it just takes a broker who is paying attention and not passing along the default quote from the insurance company. 5 questions to take to your broker If you want to make sure this is buttoned up, here are the questions to ask. Copy these, send them in an email, and ask for written answers. 1. Do I have an inland marine policy in place, and what is the total limit? 2. What is the per item sublimit, and which of my tools would get capped under it? 3. Which of my higher value tools should be scheduled individually, and at what values? 4. Is coverage on a replacement cost basis or actual cash value? 5. Does the policy cover my tools everywhere they go, including in the vehicle, at the jobsite, and in transit? If your broker cannot answer these quickly and clearly, that is information too. The truck getting totaled is bad enough. Losing the contents on top of that and then finding out your policy only covers a fraction of what you assumed, is the kind of avoidable pain that ends careers. Spend twenty minutes with your broker this month. Future you will be grateful.  Welcome to our new insurance agency blog!
This is our very first post. We're not quite sure what we're going to write about here, but the plan is to create helpful content for customers and prospective clients about information that is relevant to you. We hope you'll come to view this as a top resource for keeping your family and your finances safe. Here are a few of the topics we may be writing about:
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