Frequently Asked Questions
What is a Premium Audit?
Premium audit is an audit of the exposure basis for an insurance policy (i.e., payroll, sales, or vehicle count) after the end of a policy period to determine the actual (audited) exposure for the purpose of making a final calculation of the premium and premium taxes.
Why Do i need to do an audit?
Think of it like your taxes. Just like your annual filing with the IRS, your policy audit is required for Work Comp, General Liability, and a few other policy types. Why? When you began coverage for your policy you provided an estimated total of the exposure (i.e. payroll estimates, expeceted Total Gross Receipts, etc.)your business was expected to represent. Your premium was based on that estimated exposure. The resason the audit is important is that it will adjust your premium to the actual exposures your business represented. IN SIMPLER TERMS it could potentially lead to a return of premium for you.
What Happens if I don't do the audit?
The short answer- HIGHER PREMIUMS, PENALTIES, and/or ADVERSE UNDERWRITING DECISIONS. When you do not complete the required audit when your policy ends or is canceled it forces carriers to calculate an estimated audit result. It may also lead to an Audit noncompliance penalty being assessed. This penalty is usually a significant amount and double your premium. If your carrier doesn't have the accurate exposure info (payroll, gross reciepts, etc.) the estimated audit results typically result in an additional premium being due.
Audit Resources & Education
Resources & Articles
