News & Updates
For many business owners, an audit ranks in the same category as a root canal. However, in the world of workers’ compensation, premium audits are routine, and relatively quick and painless.
Your workers’ compensation policy premium is based on estimates you provided at the time of application. At the end of your annual policy period, a final premium audit is conducted to determine that you paid the appropriate amount for your workers’ compensation insurance.
Final premium audit is based on actual payroll, operations and job classifications. Your insurance carrier will determine the best method to conduct your final premium audit based on the size and complexity of your business. Depending on your particular circumstances, there are four ways a premium audit may be conducted:
Below are four common questions business owners ask about the premium audit process.
① How do I prepare for my audit? The most important step is to have the appropriate records organized and available for your auditor. Your advance preparation will help the auditor quickly find what they needs, which means less time and questions for you.
② What information is requested in the audit? Premium audits seek to confirm that both the business and its employees are correctly classified. For example, if you own a restaurant, there are business classification differences based on whether you have wait service, fast food or delivery. The same is true for employees. Different job functions have different classification codes that affect the amount you pay to insure them. Some common records you will need to provide during your audit are:
③ What are the penalties for noncompliance? As part of the insuring agreement between you and your insurance carrier, you agree to participate in a final premium audit. Many states permit or require surcharges for non-compliance. Failure to cooperate in an audit may also result in the cancellation of your workers’ compensation insurance policy.
④ How long does the audit process take? Your insurance company will begin the audit process upon policy expiration. Most audits are completed within 90 days of your policy expiration. Promptly providing the requested supporting documents to your insurer may expedite the process. Your insurer will provide an explanation of your audit results.
Your business staffing and payroll can fluctuate for many reasons. An annual premium audit is the best way to make sure you are paying the correct amount for your insurance coverage.
For questions, please contact a member of your b&p Sales Team - 888.722.3373.