When business homeowners hear the word "audit," they'll naturally need to bury their heads within the sand. however, a premium worker compensation audit is not a foul factor. what's a premium audit? really, it is a sensible thing: It makes positive the premium you are paying for a business policy accurately reflects your business risk exposures — and it may doubtless lower your premium.
All workers' compensation policies and plenty of alternative sorts of business policies need premium audits as commonplace apply.
Since business policy premiums square measure generally supported either your company's payroll and worker classifications or your sales, your insurance underwriter can need to examine if those have modified since it initially calculable them at the start of the policy's term and create any necessary changes to your policy's premium.
What Is a Premium Audit?
As your policy term reaches its finish, your nondepository financial institution can appraise your business regarding the requirement to conduct a premium audit within the close to future. you may be asked to submit bound documents by a particular date and answer general questions on your business and its workers.
For workers' compensation policies and other small business policies with premiums based on your payroll, some of the information you may be asked to provide could include:
- Recent quarterly 941 forms (federal employer tax returns)
- Recent Schedule C tax forms or other income tax forms
- 1099s and certificates of insurance for any independent contractor
- Details about company owners, officers, and partners, including names, titles, where they work, percentage of stock owned in the company and earnings over the audit period
- Your company's general ledger or sales journal
For insurance policies supported income, you will probably get to give your book of account, money receipts, and excise tax records. Once you've got collected the desired documents and company info, the audit method is typically comparatively fast and easy. Your insurance firm could enable you to transfer your documents employing a secure on-line portal. In some cases, the insurance firm could send somebody to your location.
The insurance company will be looking to see if your actual payroll or sales figures match up to what is estimated for the policy's term. It will also be looking at employee classifications and numbers, as well as any independent contractors or subcontractors you work with. Keep in mind that in some cases, contractors may be eligible for coverage under your workers' compensation policy.
If verity payroll or sales numbers ar beyond what was originally calculable, your premium can seemingly go up. If they are lower, the premium can seemingly go down. you ought to establish the end result of the audit — and whether or not your premium is dynamical — inside some weeks when you give the mandatory info to your insurance company.
The Upshot of a Premium Audit
Yes, a premium audit might lead to you paying the next premium for your workers' compensation policy or alternative business policy — however, you may additionally find yourself with a lower premium or no amendment. Ultimately, it's a comfort knowing your insurer is making sure your business insurance policies are appropriately designed and priced to provide the coverage your business needs.
