Workers compensation audit or the annual premium audit (sometimes known as the payroll audit)
determines your company’s actual Workers’ Compensation insurance
premium for the policy period.
Workers Comp (and in rare cases General Liability) is priced using payroll numbers. Of course the riskiness of the job employees are performing is crucial, but that riskiness is represented as a “class modifier” that is multiplied by…you guessed it…the total payroll for those employees.
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What does it Entail?
So what happens if your projections are off? That’s where the audit comes in.
When you start your policy, you will guess what your payroll will be for a time period. An audit verifies that this number is somewhat accurate. It helps an insurance company verify the amount of risk they’re insuring. Do you need help with a Builders Mutual audit?
They ask you what your actual numbers were in the prior year and then, using the same rate that you were given at the beginning of the year, they charge you the difference between what you paid and what the premium really should’ve been.
That is why, on these policies, you’ll see the price listed as “estimated premium” or “advance premium.” It’s the best estimate of what the policy costs. The real price is determined once the policy period is over.
Ask your agent what the basis is for your premiums. Your exposure basis is the data that the insurance company uses to calculate its expected risk, and with that the premiums to cover that risk. Examples include payroll data, sales data, vehicle counts and/or mileage data, and the like. They may also ask for a description of your operations, information about the officers and owners of the company, job duties, names of subcontractors, certificates of insurance for subcontractors, and/or tax documents.
Save Up to 27% in Workers Compensation Audit With AmeriAgency. With More Than 20 Years of Experience, We’re Sure We Can Help!
For more information, call us at 1-888-851-5572. If you would like to receive a fast and free quote, visit us on our webpage!
