Free Patch Policy Review Uncovers Costly Insurance Errors For Two Oil Patch Contractors, and Provides Clear-Cut Remedies to Save Oil Patch Contractors Thousands of Dollars.
CASE I-Oil Patch Contractor Shockingly Paid $9,000 Too Much for Their Insurance.
A new client asked us to review a recent insurance audit that was sent over to them from their previous agent. The audit included policies for both general liability and workers’ compensation. When we on boarded them as a client, we had promised to provide our Free Audit Review to ensure they were being accurately billed for their correct exposures.
This particular client sets up and supplies on-site water manifold transfer systems for hydraulic fracturing (fracking) projects. While reviewing their workers’ compensation policy, we immediately noticed that the office manager’s payroll had been included under the field employees’ payroll. This critical error was apparent in both the general liability and workers’ compensation premiums:
- The general liability exposure was based on the payroll for employees working at the site location.
- The office manager’s payroll should not have been included within the general liability premium.
- Furthermore, the office manager’s payroll was included under the field employees’ classification instead of a clerical classification.
- The rate for field employees was $12.00 per $100 of payroll vs. .50 cents per $100 for clerical employees (much less).
The solution was a simple and quick one for OPI. We completely removed the office manager’s payroll from the general liability‘s oilfield exposure. The workers’ compensation solution was to switch the office manager’s payroll from the oilfield class to the clerical classification. This was an easy fix for us. By catching these errors, we were able to recoup $9,000 for our new client. Snip.Snap.Done.
CASE II- The Big Mistake: Oil Patch Contractor Employee Miss-classification Costs Company $35,000 in Unnecessary Insurance Premiums.
We were reviewing a company’s general liability and workers’ compensation policy. This particular oil patch contractor performs excavation and clearing of land for new oil & gas lease locations. They had two full-time mechanics working on the company trucks at their premises (e.g., changing tires, oil, performing daily vehicle inspections, and keeping their trucks running properly and safely).
The mechanics’ payroll had never been separated from the payroll for employees who handled excavation projects out at the lease sites. Apparently, this had gone on for nearly 5 years:
- The rate difference was about $6.00 more per $100 of payroll.
- This added up to about $7,000 a year in excess general liability and workers’ compensation premiums.
- At $7,000 a year over a period of five years, this was costing them $35,000 in extra insurance premiums that never should have been spent in the first place.
Simple because we are oil patch insurance experts. We created the appropriate missing class code for the mechanics so that their payroll could be separated on both the general liability and workers’ compensation policies. We rectified the error right away, saving this company from paying any excess premiums in the future.
We run into examples like these repeatedly. Why? Because business owners and managers trust that their insurance agents are providing the proper insurance, when, in fact, they should be getting a second opinion.
Get A Second Opinion
How much extra have you been paying for your insurance program? It’s time for a second opinion from the experts at Oil Patch Insurance. Get your Free Patch Policy Review by calling 918-504-6723 or emailing: firstname.lastname@example.org