Why there is an audit after you have already paid
At the start of a policy, you estimate how much employees will earn and describe their duties. Those estimates help set the initial premium, which is the price of the insurance. An audit is the insurer’s review of the actual records for that policy period.
If the business grew, actual payroll may be higher than expected and an additional premium may be due. Lower payroll can produce a return premium, depending on policy minimums and other terms. Paying every installment does not necessarily mean the final audited amount has been settled.
Class codes describe the kind of work being insured
A workers’ compensation classification groups work for insurance rating. A code for office duties and a code for hands-on construction can have different rates because the work presents different injury exposures.
The job title alone does not decide the classification. Explain what each person does. If the rules allow payroll to be split among classifications, the insurer may require time records showing the work performed. Ask which records qualify before relying on a split.
What records help the auditor understand the business
Keep payroll reports, employee duties, relevant time records and tax or accounting records requested by the insurer. Retain owner inclusion or exclusion documents. An excluded owner is someone whose own work injury is not covered under the approved exclusion.
Keep subcontractor agreements, payment records and proof of their insurance for the work dates. The auditor may need these to decide how subcontracted labor is treated. Store records where they can be matched to the policy period, rather than sending unrelated years of information.
What to do when the audit arrives
Read the request, note the deadline and confirm the dates being reviewed. Provide the records through the insurer’s approved secure channel. Tell the auditor about a change in operations, ownership or payroll that explains a difference.
When the results arrive, compare the payroll totals and classifications with your records. If something seems wrong, ask for the audit detail and identify the specific entry in question. We can help organize supporting documents and questions for the insurer. An audit dispute does not automatically suspend payment or reporting deadlines.