What Is An Insurance Audit?

The Insurance Audit is an important part of the insurance process. It requires your agent to go over your insurance policy in detail. This may include an analysis of your premium base and classifications. If the amount of coverage you have is too low or too high, your agent can adjust your initial premium deposit or revise the rating basis to reflect the actual exposures.

Process Of Insurance Audit

The premium audit process will also look at your payroll accounting and your payments to independent contractors. They will request copies of any subcontractor certificates of insurance. The insurance premium auditor will verify that you have General Liability coverage during the premium audited period and determine how much premium you need to pay. Once this process is complete, the insurance premium auditor will provide you with a final report. This report will either result in an increase in your premium or a refund.

After a year, you must re-up your insurance policy with your insurance carrier. When you renew your policy, you should receive an audit worksheet. The audit worksheet requires you to review data from the previous year. In some cases, it requires you to report actual payroll data. If you do not submit your payroll information, you may not be covered for certain claims.

Avoiding High Premiums

To avoid a high premium, be sure you have accurate financial data on hand. This means sales figures, payroll figures, and proof of insurance for subcontractors. Since insurers treat subcontractors as employees, you need to make sure that you have an accurate record. It is also a good idea to have someone familiar with your day-to-day operations take part in the premium audit process. This will lower the risk of making mistakes during the process.

In the case of an Audit, you may not know that your insurance costs are understated. A premium audit can reveal that you have understated sales or underestimated revenue, which can increase your insurance costs. If you underestimated your sales, your policy could be updated by $5,000.

Risk And Exposure

The Insurance Audit will review your risk exposure and payroll data. You should also look at your employees’ job duties to make sure you have the right amount of coverage. This is because general liability policies rely on business information to set the premium and risk levels. Keeping payroll and revenue records up to date can be challenging, especially at the beginning of a premium term year.

Insurance Premium Auditor

The premium audit will be performed by an independent professional. You will pay the insurer for this service. Generally, the insurance premium auditor will review your books and submit a form to your insurance company. The insurer will calculate the total and inform you. It is important to make sure that your premiums are appropriate for the size of your business.

A general liability audit can be a stressful experience. Your premium will go up or down depending on the results of the premium audit. You might end up overpaying, or you might pay too much. Luckily, you can still get a refund if you have overpaid or underpaid. However, if you are underinsured, you will have to pay the difference. Your insurance provider will let you know when to make this payment.