If I do not pay my GL Insurance Additional premuim due. From Last year audit do I go to collections?

Question

I got bill for $14,000 from last year period 10-06- 10/07

If i do not pay and cancel my policy for 10/07-10/08 does my

info get sent to a collect agency.

Answer 1

If you don't pay your AP, your insurance company will eventually cancel your policy for non payment.  Then you'll be without coverage, or have a lapse in coverage, which is a bad situation for many reasons.  The insurance company will eventually sell that debt to a collections agency in an effort to recoup the lost premium.  

I have seen cases where cancellations for non-payment have resulted in detrimental hits on the business' insurance scores (sort of like a credit score, but for businesses.)  This may have an influence on the premium you'll pay with your next insurance company.

I have some suggestions.  Work with your agent to see if they have a premium financing program.  The agency or the PF company will pay the insurance company, and you pay the agency or PF company over time.   Also, depending on your agent's relationship with the company, perhaps they can arrange a special payment arrangement.  Instead of paying the $14k in one lump sum, maybe you can divide that into a few installments.  Do whatever you can to pay the company and resolve your financial standing.  Even if you switch insurance companies, the billing delinquency may come back to haunt you in the future.   It's best to reconcile the AP as soon as humanly possible.

My next suggestion is-- without opening a huge can of worms--please make sure that your payrolls/sales/revenues are updated and accurate and endorsed on your policy ASAP.   I am not sure if you work directly with your insurance company, or if you go through an agent, but I would hope your agent reports your payrolls (or whatever the premium basis is for the audit for your type of business) on a consistent basis.  

If your payrolls/sales/revenues are volatile, and fluctuate drastically from year to year (or even month to month) I would suggest asking your agent or insurance company if they offer a self-reporting feature.  You send your updates to the insurance company on a monthly or quarterly basis, and your policy is endorsed to reflect the changes at exactly that time.  Pay the AP, or receive the RP (returned premium), as your business fluctuates, at that exact time.   If you take these fluctuations into account throughout the year, then there should be little to no AP or RP at the year-end annual audit. :)