Insurance Charges For Resignation

Topic 26387 | Page 1

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John D.'s Comment
member avatar

Hi Truckingtruth,

I have been employed by a freight company for a couple of years and recently I changed jobs. They are charging me in excess of $3,000 for "insurance" and stating that it is imposed by the insurance company.

The company pays for my policy that renews 1st of March every year, and I left the company at the end of April, which is two months in. They claim that they have to pay an early termination charge of 50% of the premiums for the remaining ten months in the year. Thus, I am liable for 50% of ten months of premiums which is over $3,000. I am unsure if the premiums are paid annually in advance or on a monthly basis.

I called both the insurance company and they said they don't impose any surrender/early termination charge, but it is the brokers that arrange the fleet agreement with my ex-company. The insurance broker says they have no idea regarding the terms of the and say that they are not aware of any surrender/early termination charges either.

Would my ex-company be able to use my insurance premiums on other employees? If that's the case, should I still be liable for it as there was no loss to my ex-company? Which party (aside from my ex-company) can confirm that indeed the charge collected by the insurance company? What are my options here?

Thanks in advance.

Junkyard Dog's Comment
member avatar

Talk to a lawyer.

Errol V.'s Comment
member avatar

Must be a small company. Can you come up with the name?

On top of that, you say the insurance company doesn't know anything about such a charge back. You mention the insurance broker. Do you get loads for a board or a freight broker? If you had any contract relationship for the loads you were dispatched on, you need to look at your copy of the contract. The you will need to show it to a lawyer. This might give him a chuckle.

One last thing: If Ex-Company paid insurance premiums in advance, like for the whole year (pigs are getting ready for flight here), Insurance Company needs to refund the unused premium to the Ex-Company. Unused Insurance (If you stop a policy before its contract term) is not used and needs to go back to whoever paid it.

John D.'s Comment
member avatar

Must be a small company. ... Unused Insurance (If you stop a policy before its contract term) is not used and needs to go back to whoever paid it.

Thanks for your comment. It's a Canadian company and they have 50-100 trucks which would be relatively small. I agree for a single policy, unused premiums are returned - albeit with a small fee, charge. I did call the broker again and she said it is indeed paid annually in advance on a fleet basis, where the premiums DO NOT get refunded when they "take a vehicle off". However, it sounds like they wouldn't have to pay again when they "add a vehicle on", so there is no extra cost to my ex-employer. She wouldn't give me much more details than that. A lawyer might be the only way out.

John D.'s Comment
member avatar

Must be a small company. Can you come up with the name?

On top of that, you say the insurance company doesn't know anything about such a charge back. You mention the insurance broker. Do you get loads for a board or a freight broker? If you had any contract relationship for the loads you were dispatched on, you need to look at your copy of the contract. The you will need to show it to a lawyer. This might give him a chuckle.

One last thing: If Ex-Company paid insurance premiums in advance, like for the whole year (pigs are getting ready for flight here), Insurance Company needs to refund the unused premium to the Ex-Company. Unused Insurance (If you stop a policy before its contract term) is not used and needs to go back to whoever paid it.

Thank you for your suggestions. I won't post the name but its a company with around 50 trucks, so relatively small.

I was able to get some more info from the broker. They said that the company was on a "fleet-basis", where no refunds were given if they "take a vehicle off". Everything is settled as the total number of vehicles in the fleet, annually when premiums are paid (I guess pigs do fly). However, It sounds like they would not need to pay extra to "put a vehicle on" since I left, so no extra cost to the company.

Cornelius A.'s Comment
member avatar

Most of these companies are insured on what is called a reporting form meaning they put a deposit down and get billed every month on the number of trucks that they reported for that month , some of them choose to be billed on the revenue reported that month meanwhile others choose to report mileage. Were you operating your own equipment? if that was the case then maybe that come from the minimum earned premium because most trucking insurance companies do have a minimum earned premium ranging from 25% to 40% of the total premium amount. but in all my years in trucking insurance this is my first time hearing such a situation

OOS:

When a violation by either a driver or company is confirmed, an out-of-service order removes either the driver or the vehicle from the roadway until the violation is corrected.

Cornelius A.'s Comment
member avatar

If you cancel your policy, a company can choose to cancel you on a short rate basis meaning they can penalize you and bill you for some extra months even though you are no longer with them

Must be a small company. Can you come up with the name?

On top of that, you say the insurance company doesn't know anything about such a charge back. You mention the insurance broker. Do you get loads for a board or a freight broker? If you had any contract relationship for the loads you were dispatched on, you need to look at your copy of the contract. The you will need to show it to a lawyer. This might give him a chuckle.

One last thing: If Ex-Company paid insurance premiums in advance, like for the whole year (pigs are getting ready for flight here), Insurance Company needs to refund the unused premium to the Ex-Company. Unused Insurance (If you stop a policy before its contract term) is not used and needs to go back to whoever paid it.

OOS:

When a violation by either a driver or company is confirmed, an out-of-service order removes either the driver or the vehicle from the roadway until the violation is corrected.

Rob D.'s Comment
member avatar

John D,

I am still unclear as to 1) what insurance costs was paid (i.e. truck insurance), and 2) how your leaving "cost them money."

Would my ex-company be able to use my insurance premiums on other employees? If that's the case, should I still be liable for it as there was no loss to my ex-company?

What insurance premiums were "yours" that they could use for other employees?

Whatever contract or agreement your employer had with the insurance company is their responsibility; not yours. Only your contract or agreement with your ex-company matters. If they claim you owe them money for the insurance premiums, ask them to show you a document that you signed saying that.

They are charging me in excess of $3,000 for "insurance"

Did they withhold that amount from your final paycheck? Did they send you a bill claiming you owe them?

Your leverage in the transaction depends on who holds the $3,000. If they took it, you are behind the power curve in leverage. It would probably cost $3,000 in attorney fees to get $3,000 from them. If they billed you for it and can't show you a document that you signed that says you owe it, tell them to go pound sand.

John D.'s Comment
member avatar

John D,

I am still unclear as to 1) what insurance costs was paid (i.e. truck insurance), and 2) how your leaving "cost them money."

double-quotes-start.png

Would my ex-company be able to use my insurance premiums on other employees? If that's the case, should I still be liable for it as there was no loss to my ex-company?

double-quotes-end.png

What insurance premiums were "yours" that they could use for other employees?

Whatever contract or agreement your employer had with the insurance company is their responsibility; not yours. Only your contract or agreement with your ex-company matters. If they claim you owe them money for the insurance premiums, ask them to show you a document that you signed saying that.

double-quotes-start.png

They are charging me in excess of $3,000 for "insurance"

double-quotes-end.png

Did they withhold that amount from your final paycheck? Did they send you a bill claiming you owe them?

Your leverage in the transaction depends on who holds the $3,000. If they took it, you are behind the power curve in leverage. It would probably cost $3,000 in attorney fees to get $3,000 from them. If they billed you for it and can't show you a document that you signed that says you owe it, tell them to go pound sand.

Thank you for the response. I am operating my own vehicle. What they meant by "lose money" is that they have paid the annual premium for me for the whole year in March. By resigning at May, they are claiming that they will not be able to recover the ten months of premium for which I will no longer work under them.

This is what the contract says - "Upon termination of this Agreement the Company will deduct the following: 1) permits, plates, insurance premiums, and transponders on a prorated basis if the contractor provides service for less than 12 months 2) heavy vehicle use tax"

It seems to me that means that they should be deducting the two months? rather than the remaining ten which they are deducting.

OWI:

Operating While Intoxicated

Cornelius A.'s Comment
member avatar

Now that explains it. So you were leased on to them. just to explain so that the others understand, when an owner-operator leases his truck to a company, this company has the obligation to insure all the vehicles that run under its authority and those funds are non-refundable. If the company has paid the premium up front, they then deduct that money monthly from their owner-operators.

double-quotes-start.png

John D,

I am still unclear as to 1) what insurance costs was paid (i.e. truck insurance), and 2) how your leaving "cost them money."

double-quotes-start.png

double-quotes-start.png

Would my ex-company be able to use my insurance premiums on other employees? If that's the case, should I still be liable for it as there was no loss to my ex-company?

double-quotes-end.png

double-quotes-end.png

What insurance premiums were "yours" that they could use for other employees?

Whatever contract or agreement your employer had with the insurance company is their responsibility; not yours. Only your contract or agreement with your ex-company matters. If they claim you owe them money for the insurance premiums, ask them to show you a document that you signed saying that.

double-quotes-start.png

double-quotes-start.png

They are charging me in excess of $3,000 for "insurance"

double-quotes-end.png

double-quotes-end.png

Did they withhold that amount from your final paycheck? Did they send you a bill claiming you owe them?

Your leverage in the transaction depends on who holds the $3,000. If they took it, you are behind the power curve in leverage. It would probably cost $3,000 in attorney fees to get $3,000 from them. If they billed you for it and can't show you a document that you signed that says you owe it, tell them to go pound sand.

double-quotes-end.png

Thank you for the response. I am operating my own vehicle. What they meant by "lose money" is that they have paid the annual premium for me for the whole year in March. By resigning at May, they are claiming that they will not be able to recover the ten months of premium for which I will no longer work under them.

This is what the contract says - "Upon termination of this Agreement the Company will deduct the following: 1) permits, plates, insurance premiums, and transponders on a prorated basis if the contractor provides service for less than 12 months 2) heavy vehicle use tax"

It seems to me that means that they should be deducting the two months? rather than the remaining ten which they are deducting.

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.

OWI:

Operating While Intoxicated

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