An insurance audit can happen just about any time. The insurance audit can cover two lines of coverage in their policy terms: general liability and workers’ compensation. The insurance company can request for a voluntary self-audit or perform an audit through their auditors representing the audit insurance company.
This form of insurance audit is usually done by the audit insurance company to distinguish the risk exposures that have been captured. It will also ensure proper coverage of the exposures through adequate premiums.
Depending on how much is covered for general liability, the audit may ask for all the annual receipts, the remuneration and payments made by the independent or sub-contractors for an audited policy term. The auditor will also require insurance certificates proving the coverage in place during the audited period.
The audit insurance company will then prepare, calculate and offer a final audit, where there may be a return or an increase in the premium.
If there can be a substantial increase in the risk exposures for a previous term, the existing policy term will support the previously audited term, and you will need to pay additional premiums to the insurance company.
Insurance Audit for Workers’ Compensation
Policies for workers’ compensation are determined through estimated payrolls when written originally. The audit will determine the actual remuneration/payroll and possible uninsured contractors that have been paid during the audited policy term. If the auditor does an audit to the company, it will need to prepare:
- the payroll records, consisting of the Federal Tax Quarterly reports and the individual employee earnings including the overtime;
- a detailed job description of each employee for proper classification;
- the proof of all payments done to independent contractors and subcontractors;
- furnish copies of all insurance certificates proving workers’ compensation have been audited, and the copies of contractor exemptions filed with the state;
- a detailed description of the company’s operations.
Once all the above are furnished, the audit insurance company will prepare, calculate and provide the final audit report, which may lead to some returns or charging more in the premiums.
If you need to be clarified about how upcoming insurance audit are prepared and done, just look for insurance agents found online to give you pertinent details.