If you provide workers compensation insurance for your employees, you will need to be prepared for an end-of-the-year audit. This review of your records ensures that you have paid the correct premiums for your insurance policies and that your paperwork is in order.
What is Done During the Audit?
Workers compensation audits are conducted to verify that the actual payroll and scope of work for your company match the quote for those items that you were given at the beginning of your policy.
What Happens If These Items Do Not Match?
If the records from the projected numbers do not match the end-of-year actuals that you provide, the price of your policy will be adjusted.
Why Do We Need an Audit?
When you purchased your workers comp policy, you estimated your total payroll and the scope of work your employees would handle while on the job. These numbers were used to calculate your insurance premium for the year.
However, if these estimates prove to be inaccurate, adjustments must be made. Sometimes you have more work and hire additional employees; sometimes the type of work your employees do changes as your business increases. In any case, an audit allows your policy to adjust to your actual needs to ensure your coverage.