What if you don’t complete a paper audit or don’t respond to the carriers request for a physical audit? Gabrielle explains.
Most policies are not auditable, meaning the policy premium is based upon the information provided at the start of the policy. Workers Compensation policies, since they are based upon payroll and payroll can fluctuate, are auditable. After the policy expires, the Workers Compensation carrier does an audit. One way to do the audit would be a paper audit, which means the insured is responsible for sending payroll and other information to the carrier along with completed paperwork.
The other way to do an audit is a physical audit in which the insurance company sends an auditor to meet with the insured’s authorized representative and they review all payroll and tax information together. If the audit determines the payroll was higher than what the policy was based upon, the insured will owe additional premium. If it was less, the insured will have premium returned to them or a credit applied to the current policy.
What if you don’t complete the paper audit or don’t respond to the carriers request for a physical audit? They will do an estimated audit, which will ALWAYS have higher payroll and a large additional premium due, so it is important to make sure the audit is done each year.
For more information, please contact us.