How to NOT Fail a Workers’ Comp Audit and Ace It Instead

Audits are a necessary part of your workers’ compensation policy. Your premium is only an estimate of what you owe and is based on the projected payroll for the coming year. Once the actual payroll is determined, your premium is adjusted; you either end up paying extra or you receive a partial refund from your insurance carrier. The audit is what determines this result.

The purpose of the audit is to establish whether your coverage accurately reflects your risks. As part of the process, your insurer checks to make sure your employees are properly classified, and that your rates are accurate.

If the information you provide to your insurance carrier is not correct, your policy will not provide the proper coverage. So when the incorrect information is checked, you will fail the audit.

What constitutes insurance fraud?

It is very much in your interest to provide the right information and cooperate with the audit. You may know of some business operators who have fudged information and were prosecuted for insurance fraud. Others may have failed to provide updated information or refused to allow their insurers to visit their facilities, which are breaches of their insurance contracts and allow the insurers to cancel or not renew policies.

Other no-nos include underreporting payroll, providing incorrect job descriptions, and employing contractors without informing the insurers.

Acing the audit

For the best results, always provide up-to-date, accurate information to your insurance carrier. Maintain open communication for a successful partnership that provides the appropriate coverage for your employees.


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