Why You Shouldn’t Skip Your Worker Comp Audit

Many businesses seem to omit annual Worker Comp audits, but doing so can introduce additional risks and costs. Here are some great reasons why you should complete the insurance company exam this year.

Why Insurance Providers Audit Policies

Let’s start from the beginning. Insurance companies require tests because they help determine your annual liability. The more employees you have, the higher your salary will be, and the higher your insurance premiums will be.

Employee compensation is initially determined based on estimated salary. Each year, insurance companies require proof of salary, overtime, food, lodging, and payments to subcontractors. Please note that general liability insurance may also need to be reviewed if it is based on payslips or sales.

Workers Compensation Insurance is a contract between the insurance company and the insured person as stated in the insurance contract. By completing this policy, you agree not only to pay the premium, but also to take the exam. Failure to complete the exam is a violation of the terms and will ultimately be considered uncooperative by the insurance company.

Consequences for Not Completing an Audit

The consequences of not completing a Worker Comp audit can be far-reaching and include some or all of the following:

• Cancel all current worker’s compensation insurance: If your employer does not comply with the review, the insurance company may terminate your policy or arrange for your current policy not to be renewed.
• Monetary penalty: States vary in the authorized fines an insurance company can impose if an employer is deemed uncooperative. This can result in a 20–50% increase in premiums, or a flat fee of up to $2,000.
• Legal action: Please note that this is a contract and if one party refuses to comply with its terms, the other party may take legal action.

Also, if your insurance company does not cancel or renew your current policy and you have to find a new insurance company, your new insurance company will learn that your policy will not be canceled or renewed and may charge additional fees.

How to Prepare for a Workers Comp Audit

Preparing for a Worker Comp audit is one way to minimize stress and get a rough idea of ​​what to expect.

• Start planning your audit: Insurance companies usually notify six to eight weeks before the policy expires that it is time for a review.
• Collect the documents: We need all information about wages, risks and billing history.
• Update your job description: Auditors examine the role of each individual and the general operation of the business. Therefore, it is recommended to review, update or even create job descriptions for all employees.
• Review the examiner’s work: It never hurts to go over the exam again and make sure the information is consistent with how the company pays and operates.

Be Sure to Complete Your Worker Comp Audit this Year!

To avoid penalties, always perform an inspection if requested by your insurance company. It’s not just because your salary has increased. If your salary is reduced, you can get a refund.