Fighting a insurance company! HELP!

I own a 5 location pizza chain here in St. Louis. My wife and I own the company, commissary, and 2 of the stores and we license out 3 of the stores to 2 different owners. The company has been in business since 1981 and we have owned it since 2000.

We have had the uninsured motorist insurance policy in effect since day one. Our rates have stayed steady for 7 years, then this past spring upon renewal our insurance company(New Hampshire) decided to do a audit for the first time in 8 years. They decided to raise our rates up $7,000 a year which would put us at almost $19000k for the year for just 2 locations. We decided we couldn’t afford that and canceled our policy and found a different company to insure us and it was actually cheaper than what we were paying originally. The problem now is New Hampshire want $7,000 for LAST YEARS POLICY which was already paid in FULL.

We understand if you are going to do a audit and raise the rates for the current year, because atleast then the customer(us) can make a decision to keep or discontinue the policy, but they want $7k for last years policy which has already been paid in full for over 6-7 months. We have talked to a few different insurance agents and they all said that is not “right”.

We have tried to communicate with New Hampshire but have gotten NO where with them, the person we have been speaking with even refused to let us talk to her supervisor the last time we called her which was Tuesday. There is no way a insurance company should be able to charge a person 7k extra on a policy that was already paid from the previous year. We have filed a complaint with the Department of Insurance of Missouri(where we are located) but they said it could take up to 30-60 days for them to review it. New Hampshire has already started a collection agency against us. We pay all our bills and pay them all on time and we have also worked very hard the last 10 years to keep our credit in the excellent category and we dont want it ruined over this. Also we don’t really want to get a lawyer and end up spending just as much money on that then we would just paying the 7k which we dont really have right now anyway.

Anyone have any suggestions or help in fighting this? Feel free to email me we will take any suggestions/help we can get, this has been a rough year and we would really like to get this resolved somehow going in to 09. Thanks…brian

It sounds like there is some sort of “re-rate” provisions in your policy…And if this is the case, the insurer can do an audit and back date the premiums if their audit shows they had not previously charged you on the actual risk…You may need to check further with your state regulator to see if this is allowed…

Did the other agent you talked to read the policy before providing an opinion?..Sadly insurance contracts are complicated documents and it will take a thorough review before any one can offer an opinion…And even if it comes out your way, it sounds like this will end up in court…Although you want to avoid a lawyer it may not be possible…The sooner you employ a lawyer the better the end results (in most cases)…

Good luck…

PS…In my past life I was an insurance adjuster…I did not do underwriting but heard some bad stories at times…

My experience with delivery insurance is minimal. However, let’s remember that insurance is risk based. We are betting that we will need them and they are betting we won’t. So, delivery insurance is based on the amount you do in sales for delivery. The more deliveries you have, the higher your risk. You have an “auditable” policy. All insurance co. reserve the right to audit you and make any corrections as they feel appropriate.

Your rate is based on the dollar amt you did on delivery sales. The less you do (wink wink) the less you pay.
I use a rather large insurance co. out of California. They provide our entire franchise with a competitive rate and are not very apt to audit, unless they have a need. They try to make more money from selling other policies than from conducting audits.

Audits are time consuming and can be costly. I’m sure if you talked to the insurance co., instead of a lawyer, they might be willing to negotiate down to keep the lawyers out of it.

But for peace of mind…go see an insurance attorney for a consultation to see if it is as bad as you think.
If you would like my insurance co. name, pm me and I will be glad to let you talk to them. They keep up with the DMV’s and all.

I am a former insurance agent and I can tell you without a shadow of a doubt you need to hire a lawyer to look at your case. You may or may not have a leg to stand on, but you trying to deal with the insurance company is a waste of your time. In my experience a call from a lawyer is going to get their attention.

Just a note, almost every policy that deals with liability as it relates to our business is tied to sales. The agent that sold you the original policy may have low balled your sales to get your business, if that is the case insurance agents carry errors and omissions insurance and you should go directly after the agent.

Its to my understanding they go off the average amount of drivers that we have working during a full day and night, they always averaged it out to 2.5 in the past and now they are averaging it out to 4, even though nothing has changed significatly with our payroll. We have had the same amount employee’s working give or take depending on the day or time of season the same the last 8 years. My agent told me that New Hampshire was part of the Missouri JUA(I might have the abbev. wrong) and when they were members of that they did not do audits, they stopped being a member of that organization(not really even sure what it is, something to do with Missouri and insurance companies) and thats when they decided to do the audit.

I understand the audit is tied to the rates, but shouldnt the insurance companies do the audit BEFORE they set the rates, not a year later and then try to charge for a policy that is already been paid in full? That does not seem legal to me at all, thats the equivalent of buying a new car, then the next year the price of the car goes up so the people who sold you the car decides to charge you additional $7k even though you already bought it. I would think the audit would apply to the current year, not years past, if thats the case then why dont they just charge me 7k for each of the previous 7 years we had the policy?

I may end up getting a lawyer but I really dont want to have to pay to fight this and end up spending just as much money. i might contact the attorney general of mo. and see if he can do something or if they will even look at it.

In the end if we do have to pay this then I will be demanding that all insurance companies we deal with do the audit BEFORE the policy goes into effect. This seems completely wrong to me, and everyone else I talk to.

Any insurance company is well within their rights to come at any time and audit this risk being covered either before during or after (dependant on the type of policy). It is up to you to prove the value of the item/risk being insured.

Insure your house for too small a value? they can come at any time and up the premium. If you claim they are likely to send an adjuster/valuer to come and make sure the house was insured for the correct value.
Insure your life without telling them you had a previous medical condition - they can audit.
Medical insurance - they can do audit for example when you make a claim they might probe that little bit more.

Now in your case they have carried out their audit and come up with a significant increase in the risk (from 2.5 employees to 4) now either they have this wrong - in which case you should fight it OR the risk you disclosed of was understated at 2.5 when it should have been 4.

My driver insurance is based on sales and I have to provide proof of this after the year has finished (by the time I have this it is well past the expiry of the insurance) if my sales are more I pay more if they are less I get a refund/credit.

So in summary I think you ought to get your agent to find out exaclty why its gone from 2.5 to 4 and earn their money in justifying it to you and/or reducing the liability but I think you’ll end up paying something and yes it is legal.

A last piece of advice - make sure you read and fully understand exactly what is being insured and how the risk is calculated.

We just went through this with New Hampshire. Our “quote” for 2006-07 was about 6,000 they did their annual “audit” and whola we were hit with an additional premium of 6,000. Good luck trying to talk to someone.

Here is what we learned…the original is a QUOTE Then “audit” is a bill. If you look at your bills you will see it is listed as a quote in several areas and on the origianl policy it is disclosed to a be a quote.

In our case our premium is based on how many drivers we have on the road at any given time, times two…cuz we have 2 locations. They said our “quote” didn’t include the other location.

I know this won’t help much but they will probably let you do payments, we managed to get it broke down into a 4 month payment plan (while still having to pay the new quote) We also increased our delivery fee right away.

I feel for ya it was a horrible day getting the bill and then turning around and having to pay that and the new quote.

By the way…you guys have awesome pizza and a heck of a thing going…we used to eat your pizza year’s ago when we lived closer to the city.

If you don’t mind me asking who is your new insurance carrier?


Kris - I’m not having a dig at you but I guess ‘here is what we learned’ also happened after the event? Insurance is such and important area and it is so important to know exactly what cover you have (what is and isn’t covered) and to read the documents carefully. Think what would have happened if there was an accident at your 2nd location and the insurance company stood by ‘your quote doesn’t include your 23nd location’.

Whilst this is not a nice position for either of you to be in think what it would have been like if you hadn’t spotted something which you thought was covered. Sure you may be able to sue your adviser but hey guys please check the cover you have matches with what you thought you had.

We often think that taking an insurance advisers advice ad paying insurance solves all the problems without reading and understanding what we’ve got and as people find out that isn’t always the case. I’d hate for anyone to loose their business becuase of simple oversight.


Yes, I agree with you about looking over it carefully. And your point was exactly what made me fly off the handle when we were billed, more so than the $$$$. I was assured we would be covered if anything was to happen. (the location was listed on the policy and all the drivers are reported upon hire, termination so they were all covered and listed on the policy and updated with each change. (We actually had an accident, no claim, and there was never a question of coverage)

The other location was listed on the policy the part that wasn’t “quoted” was each location having 3 drivers at a time on the road. (So it would be 6 on the road at one time)

Epizza, if you go back and look at your bills in the right hand corner where it has your total premium you will see it says “estimate” and then there is a area that says report basis…our is annual…so we annually have an audit. I am surprised to hear this was your first “audit”, we have to fill out a questionaire every year, and then every year they come for a visit and we are “audited” This, however was the first year we had any changes and additional premium due.


There is a part in the insurance papers that says if the policy goes longer than 1 year then the audit will be done at the beginning of each year. We renew the same policy every year but I am not sure if thats what they are talking about, it also says under changes the premium can only change during the policy period, but in another part it says they have the right to audit for up to 3 years in the past.

I sent a official complain to the Missouri Dept. of Insurance and we are filing a complaint with the attorney general and the underwriters. Not sure if we will win or not but either way we are fighting this to the end. Their whole arguement is they doubled the amount of drivers we have on “average” and their own underwriter said they are reading the audit wrong, they read it 2.5 drivers average a day for 7 years and then all of a sudden decided it was going to be 4 now, the policy went from around 10k a year to 17k, which is completely ludricous. Our new Insurance carrier is cheaper than 10k but we do adjust the amount insured a little so that might be some of it.

Kris, I believe our new insurance is through the Mckellan group, I could find out for sure for you in case you want to shop around, I havent been involved to much with the new policy, my wife and the agent have been handling all of it, I was staying out of this mess until we didnt get anywhere with New Hampshire and our complaint for a few months.

New Hampshire said the same thing about us too, that we have multiple locations and thats why it went up this year, but thats a stretch to me since we have had multiple locations all the 7 years we have been with them.
I understand they have right to audit, etc… but to raise someone’s insurance over 7k and then expect them to pay for it without giving them a chance to make a choice is completely wrong, that might be common practice for corrupt insurance companies but that doesnt fly in any other industry that i know of, even a simple auto insurance policy lets you know up front what the rate is going to be. We gave them accurate information for them to base their rates on us for the last 7 years, to raise it almost double in 1 year is unacceptable.