An auditable insurance policy is one in which the premiums you pay are based on estimates of your payroll and sales figures at the beginning of your policy term, and then adjusted at the end of the term based on actual figures.
For Workers Compensation Insurance, this means that if you have more employees and your payroll has increased during the policy term, you may owe additional premiums at the end of the term to cover the increased risk. Workers Compensation insurnace premiums are based upon the wages, salaries, bonuses, and other forms of compensation paid to your employees. The higher your payroll, the higher your workers compensation premiums are likely to be. Each employee is also assigned a class code based upon their job duties and it is important that you classify them properly.
For General Liability Insurance, this means that if your sales have increased or you have taken on more projects or contracts during the policy term, you may owe additional premiums at the end of the term to cover the increased risk. If you see that your sales are increasing substantially during they year it is a good idea to contact your agent or the insurance company and advise them of the increased sales so you can avoid a large additional premium at the end of the year.
It is important to provide accurate sales and payroll information at the beginning of your policy term because it ensures that you are paying the correct premiums based on the actual risk you present. Failing to provide accurate information can result in underpayment of premiums and cause an additional premium at the end of the term, not to mention the cancellation of your current policy if you renewed with the same carrier.
Additionally, failing to complete a final audit can have serious consequences. If you do not provide the necessary information for a final audit, your insurance company may estimate your payroll or sales figures and charge you based on those estimates, which could result in you paying more than you should have. Moreover, if you fail to pay the additional premiums owed after a final audit, your insurance company may cancel your policy or take legal action to recover the unpaid premiums. Therefore, it is important to complete a final audit and provide accurate information to ensure you are paying the correct premiums and maintaining your insurance coverage.
What information will I need to provide the auditor or insurance company to complete the audit?
To complete a workers compensation or general liability audit, you will typically need to provide the insurance auditor or insurance company with the following information:
- Payroll Records: This includes information on your total payroll, such as gross payroll figures for each employee, any overtime pay, bonuses, and other compensation. Additionally, you may need to provide documentation such as payroll reports, tax filings, and other financial statements.
- Sales Records: For general liability insurance, you may need to provide sales figures, broken down by location, type of product or service, or other relevant categories. This information helps the insurance company determine your exposure to risk.
- Employee Records: You may be asked to provide information about each employee, including their job classification, work location, hours worked, and wages or salaries.
- Certificates of Insurance: You may need to provide certificates of insurance for any subcontractors or independent contractors that you worked with during the policy term.
- Other Records: Depending on the nature of your business, you may be asked to provide other documentation, such as contracts, invoices, and receipts.
It is important to gather and provide accurate information to the insurance auditor or insurance company to ensure that your premiums are calculated correctly and that you are not overcharged or undercharged for your insurance coverage.
How much time will I have to give the insurance company the information on a final audit?
The timeframe for completing a final audit can vary depending on the insurance company and the specific policy terms, so it’s important to review your policy documents or contact your insurance provider for more information.
Generally, insurance companies will provide a deadline for completing the final audit, typically within 30-45 days after the policy term ends. However, the specific deadline can vary based on factors such as the size and complexity of your business, the policy type, and the terms of your contract.
It’s important to meet the deadline for completing the final audit to avoid any potential penalties or late fees, and to ensure that your premiums are calculated accurately. If you’re unable to meet the deadline, you should contact your insurance provider as soon as possible to discuss your options and avoid any negative consequences.
