What happens when I can't pay an insurance audit in full?

Question

My company received a liability insurance audit last year which resulted in an additional $15,000 premimu due. We are a small company and can not pay this bill in full. I have been making weekly payments on the amount, but the insurance company still wants payment in full and has sent us to a collection agency. They too will not accept weekly payments. What happens now? We can not pay the bill in full. Can they sue us for the full amount? What if we can't pay the court order?

Thank

Answer 1

Well, of course they can sue you for the full amount!  If you can't pay the court order, the business can be shut down and the assets sold to pay the amount due.

You just have to work really, really hard to pay this.  Clearly, you MADE enough money to cover this, as audits are a percentage of sales or payroll - I'd suggest you need to review how the cash is being managed at the business.

Answer 2

Agree with mbrcatz, if your audit is resulting in an INCREASE of $15K then you obviously either grew a ton this year or made a ton of money more than expected.  Either that or you mistated your expected income/staffing in order to pay a lower monthly premium.

While I am empathetic towards you situation, based on the audit you either made enough money this year to cover it or you lied on your application.

Answer 3

I would continue to contact their billing department to see if they can set up a payment plan.  If you have not contacted them to make a payment plan in the past, even though you are making weekly payments, they may have not known your intentions, or the payments may have been too small to have been taken seriously and thus they turned you over to collections.

Try once again to call and set something up.  Explain to them that you just do not have that kind of money in one lump sum. Keep a log of all conversations.  Include the date, time, person's name and what was said.  This way if you do get taken to court, you can show proof that you have tried to work things out.

If it goes to court, ask the judge if the debt can be repaid in installments.  

If worse comes to worst, you may have to liquidate some of your business' assets and pay off this debt.

Good Luck to you.

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addtional ideas:

I would recommend that you get a good financial advisor and an attourney who can help you sort through this.