Why Audits Happen

Workers compensation and general liability policies are often based on estimates – your projected payroll or revenue for the policy period. Since actual figures may differ from estimates, insurers audit at policy end to calculate final premium. This is not an investigation of wrongdoing; it is normal procedure.

What Auditors Review

For workers comp audits, expect questions about payroll records, employee classifications, and contractor relationships. Auditors verify that employees are classified correctly and that total payroll matches what was reported.

For general liability, auditors may review revenue figures, subcontractor payments, or other exposure bases depending on how your policy is rated.

Documentation to Prepare

Gather payroll records, tax filings, and contractor documentation before the audit. Having organized records makes the process faster and reduces disputes.

Certificates of insurance from subcontractors help exclude their payroll from your workers comp calculation.

The Audit Process

Audits may be conducted in person, by phone, or through document review. The auditor will request specific records, ask clarifying questions, and compile findings. Cooperation speeds the process.

After the Audit

You will receive an audit statement showing final premium calculation. If actual figures exceeded estimates, you owe additional premium. If figures were lower, you receive a refund.

Avoiding Surprises

The best way to avoid audit surprises is accurate initial estimates and mid-term updates when your business changes significantly. If you add employees or see revenue surge, let your agent know.