Preparing For Your Premium Audit
February 20, 2017
From our partners at Central Insurance Companies
The amount you pay for your business insurance should reflect your operations. Many policies are based on the best information you can provide at the time your policy is issued, but that information could change over the course of the policy. You may end up not paying enough, or paying too much, for your insurance.
What is a Premium Audit?
Your insurance premium should reflect the operations of your business. Continuous change in the workplace makes predicting performance difficult. Therefore, your premium is estimated prior to your policy term. A Premium Audit is conducted after the term expires in order to determine your actual business activity.
How Does The Process Work?
An auditor representing your insurance company will contact you a few weeks after your policy expires. They will visit your office and look at your financial records. Generally, an audit should take no more than an hour or two of your time.
What Records Will The Auditor Want to Review?
* Payroll Journal
* General Ledger
* Cash Disbursements, 1099s
* Quarterly State and Federal Tax Returns
* Certificates of Insurance for Subcontractors
What Can You Do to Prepare For The Audit?
The most time consuming portion of the audit is determining who your subcontractors were, what they were paid, and locating their Certificates of Insurance. If these records are well organized, your audit time is greatly reduced.
For more information about Premium Audits, please watch this video.