Most commercial insurance is based upon an estimated exposure developed through collaboration between you, the business owner, and us, your insurance agent. Insurance policy premiums for general liability, workers compensation and garage liability are based in part on your projections for the coming year, typically payroll or sales.
At the end of each policy term, premium audits are scheduled to review estimates from the prior year to ensure the annual premium charged was appropriate. If the exposure was less than projected, it will result in return premium. If the exposure was greater, it will result in additional premium. The goal of the premium audit is to ensure the appropriate premium is applied; no more and no less.
Types of premium audits
- Online questionnaire: approximately 15-20 minutes
- Phone: approximately 5-10 minutes
- In person: approximately one hour to complete; however, some large operations may require additional time
If the premium basis for your policy is payroll, records to be familiar with and have available for in-person auditors are payroll records by employee along with payroll information submitted to your state unemployment commission. Your check register and any 1099s issued are also helpful when hiring independent contractors or casual labor. Information concerning job duties will be requested to ensure proper classification.
For premium basis of sales, common records reviewed include sales records, a profit and loss statement, and prior-year tax records for reference.
Your business is unique. Having a conversation with a real human who uses real expertise and judgment to ensure your premium is appropriate through the premium audit process just makes simple human sense.