What is a premium audit?
A premium audit is our means of obtaining information to determine the actual payrolls, sales, or other variable information used to calculate your insurance premium.
When your policy was issued, your premium was based on your estimate of variable rating information, such as payroll or sales. An insurance audit is performed to determine what the actual premium should be based on your company’s actual results.
Do I have to provide the information requested?
Yes, it’s one of the terms of your insurance contract and is a standard insurance industry practice. Rest assured we observe the highest level of confidentiality in this process.
When will the audit occur?
Audits should be completed no later than 60 days after policy expiration. Please cooperate with our auditors, including responding quickly to phone and mail inquiries. If you don’t provide us with the requested information in a timely manner, your audit may be estimated and your policy could be cancelled.
What can I do to save money on my insurance premium?
If you maintain detailed records, the audit process will be much smoother and work to your advantage. Credits are available on the audit for pay types such as premium overtime, tips, severance pay, and third-party sick pay; however, your records must provide a summary of these wage types by employee, department, and class code to allow the credit. If you’re a contractor, your policy will allow a split of an employee’s wages between different construction codes. Your records should indicate what type of jobs each employee completed during your policy term. With this breakdown, we can allow the use of more than one construction code. Without this breakdown, manual rules state we must include all wages in the highest-rated class that applies to any portion of your work.
What information do you need to correctly calculate my premium?
To perform a comprehensive and quality audit, these records should be made available:
- A description of your company’s operations. What is your product or service? What are your raw materials? How is the product marketed? How is the product transported? Any change in entity ownership?
- List of corporate officers, LLC members, partners, owners
- Number of employees
- Subcontractors or non-payroll labor hired and the amounts paid
- Certificates of insurance for subcontractors.
- Gross payroll with monthly and quarterly or year-to-date totals by employee and by department
- The type of work performed and job duties by each person must be shown. This includes officers, members, sole proprietors, and partners.
- Overtime: Must be separated with monthly and quarterly or year-to-date totals by employee and by department. If overtime is not shown separately, a credit for the premium portions cannot be given.
- Tips: Must be separated with monthly and quarterly totals by employee. Tips must be shown separately to qualify as a deduction from gross pay.
- Verification: 941’s, 940, 944, W-3, Unemployment Tax Reports, or Schedule C must be provided to verify total wages. You may also want to help the auditor by highlighting pre-tax wages that will be subject to premium.
- Gross revenue, by location, from manufacturing and retail operations
- Verification source, such as your Income (PNL) Statement, General Ledger Summary, or Sales Tax Returns
- Hire and termination dates of each employee
- Exact job duties of each employee
COMPOSITE RATED AUTO
- A complete list of owned vehicles as of policy expiration
If you have any questions about a premium audit, please be sure to contact your West Bend independent insurance agent.