Workers Compensation Audit: Tips to Lower Your Premiums

Workers Compensation Audit – In this ultimate guide, we have provided valuable insights to empower you in choosing the most suitable commercial insurance coverages for your business. By applying the knowledge and best practices outlined in this guide, you can navigate the insurance landscape with confidence, secure optimal protection, and mitigate the inherent risks of running a business.

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 Compensation (and in rare cases General Liability) is priced using payroll numbers and subject to audit. 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 a Workers Compensation Audit Entail?

So what happens if your projections are off? That’s where the audit comes in.

When you start your workers compensation policy, you will guess what your payroll will be for a time period, and then it is subject to audit. 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 workers compensation policies, you’ll see the price listed as “estimated premium” or “pre-audit 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 workers compensation premiums pre-audit. 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.

Remember! 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.

Conclusion

With a well-crafted insurance program tailored to your business’s needs, you can proactively shield your operations and assets, ensuring resilience in the face of unforeseen events and potential liabilities. Before finalizing your commercial insurance policies, it’s imperative to review the terms and conditions in detail. This includes understanding the coverage limits, deductibles, exclusions, and any additional provisions that may impact your protection. Paying close attention to the fine print ensures that you have a clear grasp of what is covered and any potential limitations or restrictions that may apply. If there are any ambiguities, seeking clarification from the insurer or a qualified insurance professional is advisable.

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!