All About Insurance Audits

When most people hear the word “audit,” they immediately think of the IRS digging through their finances, but an insurance audit is a much different process.

General Liability and Workers Compensation audits are very common in the commercial insurance industry, and they are usually a whole lot less intimidating than they sound.

Insurance carriers perform audits at the conclusion of your policy period, to ensure you have paid no more or less than the appropriate premium for your exposure, during the policy period. Premiums for Workers Compensation and General Liability insurance are calculated based on estimates of insurance exposure expected during the policy period. In this case, the “exposure” would be your payroll, receipts, or sales. The final premium is determined by using the actual exposure, rather than the estimated calculations provided at the beginning of the term, and then adjusting based on the actual information.

It is very important to complete your audit in a timely manner, as to avoid an “estimated audit”. This is when the carrier estimates your exposures for the year, often resulting in additional premium. If you do not revise this estimated audit, with your actual exposures, you will be responsible for these possible additional premiums and your audit status will be labeled “non-compliant”. Carriers do have the right to non-renew your policy for non-compliance.

Reach out to your Bouvier agent anytime for questions on your auditable policies.

This article provides generic information only, for specific coverage questions on your policy please contact your Bouvier Agent at 860.232.4491 or www.binsurance.com.