Insurance Audits… We are Here to Help!
Many General Liability policies are quoted based on your company’s expected sales or payroll for a 12 month period. Workers Compensation premium is always calculated on your anticipated payroll.
Why Do Insurance Carriers s Conduct Audits?
Since General Liability (GL) and Workers Compensation rates are based on your business activities or exposures conducted in the field, the insurance carrier needs to assess how much risk they were up against during the policy period. For example; A customer estimates at the beginning of the policy period that they will have two workers in the field. Three months into the policy, their business operations soared and they hired 10 additional employees. Due to these circumstances, the insurance company had a greater likelihood to incur a claim during the year as a result of bringing on more employees.
How Does the Process Work?
Usually within 30 days after your policy expires or renews, the insurance carrier audit department will send you a letter requesting to schedule a physical audit. Below is a list of items they might ask for and generally, the audit should take no more than an hour to complete. This of course depends on how much information you were able to make available ahead of time.
Some audits, (usually GL) are merely paper self audits and only require a form to be completed by you.
We Want to be There During the Audit!
The first thing we ask you to do is call us when you’re contacted by the auditor. I want to help get you prepared for the audit as well as being there with you when the auditor arrives. Below is a list of items they ask for but many times we can get the audit completed with just the Payroll Reports, RT-6 and 941s. The auditor will ask for copies of your subcontractor’s Certificates of Insurance if work was subbed out during the year.
What Records Will the Auditor Want to Review?
Payroll Reports, RT-6 and 941s
General Ledger
Cash Disbursements, 1099s
Quarterly State and Federal Tax Returns
Certificates of Insurance for Subcontractors
