Business insurance policies are crafted based on estimated coverage needs to mitigate risks. Insurance companies conduct audits to ensure accurate coverage and pricing, a standard feature in all policies. However, audits often pose a significant challenge for business owners.
Upon notification via mail or email, audits can be completed through various methods such as phone calls, online forms, mail, or auditor visits, typically within 30 days after policy expiry. Even if a policy is canceled, businesses must fulfill audit obligations. Failure to do so may lead to increased renewal costs or policy cancellation, with potential state notification and fines.
Auditors assess compliance with designated class codes, with adjustments made for work outside these codes or discrepancies in reported payroll or sales. Audits are frequently appealed due to potential auditor errors. These audits can result in HUGE increases in premium, if the business has changed over the last year, with payroll or how the actual work is performed.
Auditors scrutinize subcontractor usage, emphasizing the importance of obtaining proof of insurance to mitigate additional expenses. If a sub does not have their own Workers Comp policy, the business owner is responsible for them on their Workers Comp policy. Clear payroll records and collaboration with insurance agents can help navigate audit challenges effectively, viewing agents as partners in the process.
If you have questions about Workers Compensation and premium structure, please do not hesitate to contact our office.
Holly McMillin
