Thursday, June 25, 2009

one definition of stupid

Ken closed his business a couple of months ago. Financial misfortune--like my loss of income last year, an unpaid debt from a client in the neighborhood of $19,000, and the economic slowdown--led to a bleak outlook toward keeping ahead of legal obligations and the very real financial responsibilities of owning a business. Making that decision was agonizing for him, but he felt it was necessary to prevent digging a deeper hole of debt from which he couldn't emerge. He is doing his best to meet persistent obligations (monthly payment on his van, purchased for the business, and taxes), but other things he simply has to let go.

One of those things is a payment his insurance company is charging him. In his first year in business he anticipated a certain volume of business, number of employees on his crew, and so on, and his premium was based upon that estimation. An audit done after that period was completed showed that his risks had in fact been greater than anticipated because of the success he was having with his business. They are charging him an additional $1900 for the risk he actually incurred, even though there were no claims against the policy during that time.

From where I sit this is completely wrong. The whole purpose of insurance underwriting is to evaluate anticipated risk and rate premiums based on experience. That's why an audit is done, to correct the information used to evaluate risk so that premiums can be adjusted. The insurance company takes a risk and the insured takes a risk. That's the nature of the insurance business. To come back to the client after the fact and say, "we should have charged you more so we're going to do that now," is absurd. Would they have issued a refund if for some reason he had actually incurred less risk? I don't think so!

What's even more absurd? The *&$(*# insurance company is expending time and resources hounding him for payment. He has explained to two attorneys that the business has closed because he can't meet his obligations. He has explained that he lacks sufficient funds for tax payments. This morning he received a subpoena to appear in court at the end of July. Give me a break! They've already spent more money to pursue this than they can recover. Have they not heard of cutting losses? Cost-benefit? Did someone have a bad experience with a contractor and decide to take it out on the next one they encountered? This is just plain stupid.

Unfortunately this is all eating at Ken while he is trying to set his sights on finding work to help keep our heads above water. (After that we'd really like to ski on top of it --metaphorically speaking!) For now I'm doing my very best imitation of a motivational speaker, complete with breakfast pep talks (which this morning elicited from him a very hearty chuckle!) and reminders that there is no room for negative thinking. (His moon must be in gemini--he's either a happy camper or feeling that he's teetering on the edge of an abyss, but not in a bi-polar kind of way.)

Anyway, all positive thoughts, energy and prayers sent this direction would be greatly appreciated. He needs some raising up!

11 comments:

mompriest said...

We have been through similar injustices of a system gone mad.....so sorry for this in you life. Prayers. many prayers.

Jayne said...

Seriously? Seriously. Stuff like this can make you half crazy. Well, I suppose he can just tell them to squeeze him and see if they can get any money to fall out? Geeez.... as if he needed this additional stressor. I do hope it all works out somehow. Prayers ascend.

Jules said...

If I could I'd put the wammy hex on that insurance company. What more do they want? blood? Egads. You might have Ken call the small business association and ask if there is anything they can do (pro bono) to help resolve this situation. I know they go to bat for small companies sometimes. Prayers of course

Mary Beth said...

Oh, man. I am so sorry and hate to hear this. My spouse, also a Ken, is also a small business person fighting with an unfair insurance company. You have my prayers!!!

drw@bainbridge.net said...

Ouch. Talk about rubbing salt in a wound. We had a similar situation, only the insurance deducted itself from itself and then the fed govt. taxed us from the "benefits" we never got when the total balance went down to zero.

It is indeed a system gone mad.

Positive thoughts are streaming your way...

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