Subject: Understanding General Liability and Workers’ Compensation Policy Audits
I wanted to touch base about something that often comes up for many of our small business clients—policy audits for General Liability and Workers’ Compensation insurance. These audits are crucial for ensuring that your coverage accurately reflects your business operations. Let’s break down why they happen, what triggers them, and how you can prepare.
Why Do Carriers Perform Audits?
Insurance carriers perform audits to verify that the premiums you pay align with your actual business exposures. Since policies are often based on estimated figures, audits ensure that both you and the insurance company are on the same page regarding your coverage needs. This verification helps prevent overpayment or underpayment of premiums.
What Triggers an Audit?
Audits are usually triggered by the expiration of your policy term. They can also occur if there are significant changes in your business, such as increased payroll or hiring subcontractors. Essentially, any change that might affect your exposure can lead to an audit.
How Do Audits Work?
During an audit, the carrier compares your estimated exposures (like payroll and sales) with your actual exposures over the policy period. This helps adjust your premium to reflect any discrepancies.
Preparing for an Audit: What to Gather
To ensure a smooth audit process, it’s important to have the right documents ready. Here’s a list of what you should gather:
– Payroll records organized by class code
– Certificates of insurance for subcontractors
– 1099s/W-9s for independent contractors
– Detailed job descriptions
– Information on ownership or officer payroll exclusions
– Sales and receipts documentation
– Relevant tax forms
Having these documents on hand will help streamline the audit process and ensure accurate results.
We’re Here to Help
If you have any questions or need assistance in gathering the necessary information, feel free to reach out. Our team is here to help you every step of the way and ensure that your business is properly covered.
Looking forward to hearing from you soon!
Warm regards,
