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NCCI RULE 1
NCCI RULE 2
CGL
GARAGE
MISC
100
What is meant by standard exception?
Describes operations that are common to many businesses. Clerical, Drivers, Salespersons, Auto Salespersons B.2.
100
True or False Payroll includes tips or other gratuities received by employees.
False. B. 2. a. Payroll excludes Tips or other gratuities received by employees. *Note that if tips are included in wages, they are not excluded. The tips must be received by the employee.
100
Can you list the order of general liability rules starting with the rule of least power?
General Rules Business Group Rules Classification Rule
100
In addition to payroll and FTEE, the auditor must provide 4 other types of ratable information and 1 other non-ratable type of information.
Licensed Vehicles Furnished Auto Exposures Tow Trucks Dealer Plates Driver Information
100
How do you handle and audit when the insured tells you that a worker should not be included because they are an independent contractor.
The worker is included on the audit. Per the 2014 Agency Bulletin on Certificates we will charge for any subcontractors who do not have insured. The agent has the option to place elsewhere if another carrier wishes to write independent contractor exposures.
200
True or False Uninsured subcontractors covered under the general contractors policy are classed based on the type of work that the subcontractor performs.
False. Uninsured subcontractors are classed as if they were employees of the general contractor. This class may or may not reflect the work that the subcontractor performs. D.3.d.2.
200
What is the credit given for overtime and explain why the amount is deducted.
C. 2. a. 1/3 So that the insured is not penalized for the additional wages that are paid over standard wages. We count only that standard wages for all hours worked.
200
What should the auditor include on his or her worksheet to justify assigning payroll as clerical?
The audit worksheet should name the workers who are clerical, describe their duties in detail and their work area.
200
Define the clerical position and explain to an agent why a worker who writes service orders is not clerical.
Employees who SOLELY create and maintain employer records, handle correspondence, draft reports, handle phone duties and are not furnished an automobile. The work area is separated from all other work areas and hazards of the employer by floor, walls, counter and other physical barriers. Does is make sense? How many clerical employees can a business of that size have?
200
Is it possible to use different classifications for an employee on a work comp and cgl policy? How about an uninsured subcontractor?
This is possible but rare for employees. One example might be a GC with employees that do drywall. The workers would be 5645 carpentry on WC and Drywall on CGL. This may be see more often with subcontractors due to how uninsured subcontractors are classed. WC as if they were employees and CGL by type of work performed.
300
A jobsite supervisor would be considered a ______ _____ and is classed under the ______ ______.
Miscellaneous Employee Governing Classification
300
What amount is deducted for a subcontractor who does not furnish complete payroll records and the subcontract price does not reflect a definite payroll amount?
None. Use the full subcontract price of the work performed.
300
True or False. Uninsured subcontractors are classed as if they were employees of the insured. If the contractor does not advise of the labor charges of its subcontractor, a proportional share of the full contract price of work performed shall be established as payroll. The minimum amount used as payroll is 50%
False. Uninsured subcontractors are classed based on the class which best describes the work of the subcontractor. Rule 28. E.
300
Garage audits do not have many classifications but the details in the description of operations are important. What additional information can be included to describe the garage business?
See page 63 in booklet.
300
Include or do not include? (CGL and WC) If included what class? Mona comes in to clean up Jeanetta's antique shop after closing. Mona is an individual, she does not work for others and does not have a business location.
Include for WC as antique store (not janitorial) No need to include for CGL. Class is gross receipts for all store workers.
400
Corrections to classifications that result in an increase in premium and are discovered during the last 90 days of the policy term (or at audit) are applied when? Are there any exceptions to this?
F. 3. Only to a renewal policy. Exceptions: Construction risks, employee leasing, labor contractors or temporary labor. These may be corrected or changed at any time.
400
What records must the auditor view to separate payroll for one employee between two classifications? True of False Vacation time is assigned to the class with the highest rate.
G. Interchange of Labor The records must reflect actual time spent working within each job classification and the wages should be comparable to industry wages for that work. Estimates or percentages is not permitted. False. Vacation time goes under the class with the highest amount of payroll.
400
Our insured manufactures laminate flooring. The main location for sales is in Atlanta. The manufacturing facility for the flooring is in Valdosta. A separate location in Tifton makes the boxes for the flooring which is then sent to Valdosta for packaging. The laminate flooring is sold in Florida, Georgia and Alabama. Do you include a separate class for each location? Explain. What state or territory do you use?
Rule 27. You would only have one class for the manufacturing of the laminate flooring. The class should be rated under the territory for Valdosta where the flooring is manufactured. You do not charge for manufacturing of boxes for the insureds product that are not sold separately.
400
Jane's duties are clerical only. She is furnished a vehicle to drive to and from work and to the bank. How is Jane classed?
Driver.
400
Define total cost. What records must an auditor view to verify total cost?
The cost of all labor, materials & equipment furnished, used or delivered for use in the execution of the work and all fees bonuses or commissions made, paid or due. The vendor summary is not enough to verify total cost. The auditor must view the profit and loss statement for expenses that may or may not be included in the vendor summary.
500
Is there a difference between: 1. Basic Classification 2. Governing Classification 3. Principal Business Explain why or why not.
Basic classifications describe the business of the employer. Governing classification is the class that produces the greatest amount of payroll. Used to determine the class for miscellaneous employees. Principal Business is described by the classification other than a standard exception with the greatest amount of payroll.
500
What is meant by per diem? Is this included in payroll? Are there times when the amount is not included? Explain the differences.
Per diem is an amount given to employees for meals, lodging or other expenses. Per diem is included in payroll when included as part of the employees pay. Per diem is not included in payroll when it was reimbursed and not included in pay. When included as pay, the worker has the option to spend the money as he or she chooses. Example $50 per day for meals when traveling. The worker may pack lunch or eat inexpensive meals. When reimbursed, the worker does not have the option to keep the extra pay. They are reimbursed for the exact amount after presenting receipts of the expenses.
500
For contractors, if a risk consists of a number of separate operations which are not described by a single classification, each operation may be separately classed and rated. What procedures apply?
Divide by job or location. If separate records are not maintained use highest rated class. Miscellaneous employees go under class with largest payroll. If work involves more than one class with different payroll bases (sales and payroll) assign entire payroll to the class where payroll is the exposure base.
500
DAILY DOUBLE The garage rewrite coming out this year will make two significant changes. One is that premier and standard garage will use FTEE. Can you guess the other change?
There will be only 4 garage classifications. Owners, partners officers Salespeople, managers, drivers, mechanics All other Clerical
500
Highest rate and highest payroll are often confused. Give an example of when you use the highest rate and when you use the highest payroll.
Highest rate - when determining class for a specific employee who does multiple duties with no separation of payroll. Highest payroll - when determining the class for a miscellaneous worker.