What to expect on a Premium Audit? Posted in General, Business As a businessowner, the word “audit,” likely makes you cringe. Whether it’s an IRS audit, insurance audit or a vendor needing records, an audit can be a stressful experience. When it comes to your insurance audit, commonly known as premium audit, there is no need to dread the process or be fearful. Here’s everything you need to know for a stress-free premium audit experience. What is a premium audit? A premium audit helps your insurance company keep your coverage and premium in line with each other. It means you only pay for the coverage your business needs. Your business’s insurance premium is billed at the beginning of the policy period based on an estimate of your overall business profile It considers they type of services or products you sell, as well as the level of business you think you will have (payroll or sales, etc.) What happens if your estimates are off? That’s where a premium audit comes in to play. Will my policy be audited? Workers’ Compensation policies are audited every year. General Liability policies are always subject to audit but may be audited less frequently. How do I complete the audit? A checklist and instructions will be provided in the audit request letter from our outside audit partner. What types of records should be ready for the auditor? Payroll records Payroll reports 941s Quarterly State Unemployment Filings Sales Sales Income Statements, sales journal, etc. Subcontractors Disbursements Ledgers such as check register, etc. Certificates of Insurance Am I required to complete my audit? The premium audit is a requirement of all insurance companies and is part of your policy conditions. If you do not complete the review, it may result in an Audit Noncompliance charge. That charge is up to two times the estimated annual premium of your policy. How will I know my audit has been processed? When your audit is processed, an audit statement is created. This will be mailed directly to you. I have questions about my audit results. Who do I contact? Contact your independent insurance agent for more information. How are Premium Audits conducted during COVID-19? At Integrity Insurance, we recognize this is a difficult time. When possible, instead of travelling on-site, auditors are conducting audit interviews by phone or other electronic means. If you are unable to conduct your audit remotely, please respond directly to the contact information provided in your individual audit requests and other communications – especially for questions regarding due dates and extensions. Tips for your premium audit When you’re securing insurance coverage for your business, ask about the premium basis. This will help you know exactly what numbers you need to provide during the premium audit which can help making the process more efficient. If you work with subcontractors, always request a certificate of insurance. Give the certificate of insurance to your auditor as it may help reduce additional premium charges. This is for both workers’ compensation and general liability. Keep track of payroll for all types of work. Inform your independent insurance agent right away about significant changes to your payroll or sales (increase or decrease). Your business can change for many reasons. A premium audit is the best way to make sure you’re paying the correct amount for your insurance coverage. For more information on Premium Audit, contact your independent insurance agent. Disclaimer: This article is for informational and suggestion purposes only. Share via: Facebook Twitter LinkedIn Email Related resources 5 Ways to maintain a commercial property that’s temporarily vacant Posted in General, Business A commercial building could be temporarily vacant for a variety of reasons, such as waiting for a new renter or renovations. Just because your building is unoccupied doesn’t mean it should be left neglected. How your small business can integrate a Business Continuity Plan Posted in General, Business As a small business owner, you might not always think about scenarios that could disrupt your profit and daily operations. However, it is crucial to have a Business Continuity Plan to ensure you are ready for any crisis.