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Audit—the word has a unique ability to strike fear into any business owner. But if you know what type of audit will be performed, what to expect, and how to prepare, the entire process should be quick and easy.
Your insurer performs a workers’ compensation audit to make sure that the premium you’re paying aligns with the risk exposure the insurer faces. The audit also confirms that employees are classified correctly for the work they’re performing.
In some states, these audits are required by law once the annual premium exceeds a set amount; in California, you can expect to have an audit after every policy term, regardless of the amount of annual premium you pay.
In this article, we’ll go over what to expect during an audit, and helpful tips to make it all go smoothly.
If an audit is going to be conducted, it’ll almost always be scheduled right around when your policy will renew, with the audit itself taking place 30 to 60 days after the current policy expires. Your insurance company will contact you to inform you that the audit needs to be scheduled.
The person who conducts the audit may be employed by an insurance company or by an independent auditing firm. This will not change the process, but it doesn’t hurt to know who you’ll be working with.
When you get this phone call or letter informing you of the upcoming audit, do not panic. You’ll be given some time before it is scheduled, and you’ll get to pick a date that is convenient for you. This appointment must be set far enough in advance that you’ll be able to gather all the records you need for the process.
Remember, there are also several ways the audit may be performed. It can be conducted over the phone, via email, or in-person during an on-site audit.
Make certain you understand how the information you give can impact the premium you pay on new policies. With both types of audits, do everything within your power to get them completed in a timely manner.
The records your auditor requests can vary. However, there are certain documents they are likely to ask to see.
Payroll records, including:
Employee records, including:
Cash disbursement records showing:
Certificates of Insurance for:
A summary of your business operations, providing all relevant details.
Keep these records organized as they are listed above—this will make it easier for the auditor to access the records they need and will allow the audit to finish as quickly as possible. Your auditor will let you know the exact documentation they’ll expect to see.
If you’re feeling overwhelmed at this point, that’s understandable. However, your audit will likely pass smoothly.
If your rates change as a result of the audit and you no longer find your premiums affordable, it’s possible that you can shop around for lower rates. But don’t worry too much about an audit; more often than not, these audits are merely routine.
At Leap | Carpenter | Kemps Insurance Agency, we understand how stressful a workers’ comp audit can feel and we’re there to guide you through it. Our dedicated team even strives to be on-site for clients undergoing a physical audit to prepare and assist. If you have questions about an upcoming audit, or are unsure about your insurance policy, reach out to our knowledgeable agents today.
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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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3187 Collins Drive
Merced, CA 95348
Phone: (209) 384-0727
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