[MRM]

This is another example of not understanding an issue and jumping to the wrong conclusions. What happened is the company owner got audited by his insurer to make sure his premiums matched his coverage. Insurance is heavily regulated, and certain benefits are mandated, even if the insured claims he doesn't need them. The result is that a business owner can decline coverage on certain activities, engage in those activities, and still be covered without paying premiums for it. The result is that the insured pays less premium than he has coverage, and the insurer (meaning all the other policy holders with that company) have more risk than they planned for.

An example of underpaying rates could be something like buying insurance based on local travel for non-hazardous cargo only and paying lower premiums because of it. But when te company gets a new contract for hauling hazmat coast to coast, forgetting to update the policy. In this case, the insurer is probably on the hook for any insurance claims, and their only recourse after an accident would be to cancel the account, but they'd still have to pay the risk. Rate fraud is the number one fraud loss for commercial insurers, greater even than pilfering and arson.

So what happened here is that AIG came in to do a rate audit and found that the 3 employee driven trucks had comp coverage, but the 2 leased vehicles did not. Apparently under that AIG policy and/or that state's law, the company owner is responsible for all work related accidents as comp, and must provide comp coverage for all drivers regardless of whether the driver is leased (an independent contractor) or a direct employee. The AIG policy would have paid out if there was a comp claim from any of the five vehicles, but the company was paying premiums for only three. So AIG adjusted the premiums and backcharged for the premiums the company should have been paying but hadn't been.

The failure to pay the comp premiums on the two leased vehicles when state law mandates coverage can be completely innocent, and it sounds like it was here. It is entirely possibe that state law does not require owner/operators to have comp insurance, but that it requires any company that leases owner/operators to provide coverage to the leased drivers. Comp laws vary from state to state and are incredibly complex. Usually there are rules defining who is to be considered an employee (requiring coverage) and who is considered an independent contractor (not requiring coverage). It is very possible to be considered an independent contractor for tax purposes and all other purposes, but be considered an employee by the State Department of Labor for purposes of comp coverage.

It looks like here you and the company made the correct determination that you don't need comp coverage as an owner/operator, but didn't realize there was a second issue of whether a leased owner/operator must be treated as an employee by the company for purposes of comp coverage, even when the tax guys and everyone else says you're independent. The law imposing comp coverage is there to protect you. If you had gotten in an accident and couldn't work, you would have at least had comp coverage, so you weren't at risk for losing everything if you got injured on the job. AIG isn't stealing from anyone, they're just making sure the premiums they receive reflect the risk they are covering and you are the beneficiary of it.