01 Nov Insurance Company Audits
I’ve talked about the insurance company audit before. Remember some insurance policies are audit-able. The most common policies to be audited are your Worker’s Compensation, and your General Liability policy. These policies are rated on payroll, sub-contractor costs or receipts.
Audits generally take place at the end of the policy period. In short they look backwards at what you actually spent either on payroll, sub-costs or what your receipts were the prior year.
Hot Tip: Insurance Company’s do not do the audits every year. If you have not been audited in the last two years, call our office and ask us to request an insurance company audit. Why? I know most of my contractors’ sub-costs are down, your receipts are down, and many of you have laid off employees. You may be due a return insurance premium from the insurance company.
Yep insurance company audits can go two ways. If you made more money than you guesstimated when you bought the policy you will owe the insurance company an additional premium because they were providing you with more coverage than they were charging you for.
But on the other side of the balance sheet, if your operation has shrunk because of the economic downturn, than the insurance company may owe you money back.
Before You Ask For An Audit Have Your Paperwork in Order
- Make sure you have copies of your sub-contractors current certificates of insurance.
- Have accurate figures showing what you have paid out in sub-contractor costs.
- Updated payrolls figures.
- Accurate accounting of your receipts.
This is a good time to pull all this paper work together, right before tax time. Audit’s do not have to be bad news, and this year often they are not!
Have a great day! If you have any questions on this post contact Lori or Pam at 800-452-6826