Liability risks can be a threat to your business, ...
A workers’ compensation audit – also called a workers’ comp audit – can be daunting, if not a bit intimidating. The good news is every company gets through it, but how do you get through it with flying colors?
As stressful as it may be, a workers’ comp audit can work to your benefit.
To ease your mind, we will explain what a workers’ compensation insurance audit is, why insurance companies require them, and what to expect when you get notice of an upcoming audit.
When you apply for a workers’ compensation policy, the premium you pay is only an estimate. The insurer takes employee data into account and projects how much you need to pay over the policy term based on the exposures.
The insurance company is interested in knowing how many employees you have and what types of work they perform for your company.
At the end of the policy term, the insurance company will revisit the data to see if the projections are accurate. The way they do that is by gathering data that reflects the number of employees and their positions over the policy term, which is usually a year. This is called a workers’ compensation audit.
The reason for an audit is that your company may have hired or lost employees throughout the policy term. You may also have created new positions or deleted previous positions. Workers may have been promoted or transferred to another position. Any of these things could impact your premium, causing it to go up or down.
By doing an audit, you can be sure that your workers’ compensation premium accurately reflects the status of your employees.
A workers’ compensation audit has two purposes – to make sure your employee data is current and to ensure you are not paying too little or too much for your workers’ compensation insurance.
The insurance company requires you to make accurate records and keep employee information up to date. It benefits your company to do so, as you will only be paying for the exposures you had – not more and not less.
Another issue insurance companies are concerned with is how many subcontractors you hire and whether they have their own liability insurance. The reason for this is that the insurance company may have to pay a claim involving bodily injury or property damage caused by a subcontractor if they do not have their own liability insurance.
Overall, a workers’ compensation audit benefits the business and the insurance company equally.
How can you get the best outcome from a workers’ comp audit? The best approach is to take the time to understand the process, ask questions along the way, and take it step-by-step.
Here is a snapshot of each step in the process:
Feel free to ask the auditor any questions you may have during the audit.
As the day of the audit appointment approaches, you can do several things to prepare for it, so all goes smoothly.
The following checklist will assist you in the tasks you need to do:
When you have checked each item off your checklist, you can go into your audit appointment confidently.
Now that you know what to expect during a workers’ comp audit, you should have no difficulty preparing for the process. If you need further information about workers’ compensation or are looking for a quote, give Leap Carpenter Kemps a call today at 209-384-0727, and one of our agents will be happy to work with you.
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Leap | Carpenter | Kemps Insurance Agency provides Commercial Business Insurance, Employee Benefits, Life and Health Insurance, and Personal Insurance to all of California, including Merced, Atwater, Los Banos, Mariposa, Madera, Fresno, Modesto, Turlock, and Stockton.
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Merced Office
3187 Collins Drive
Merced, CA 95348
Phone: (209) 384-0727
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Toll Free: (800) 221-0864
Fax: (209) 384-0401