As your policy period comes to a close, your insurance company may arrange an audit of your records to ensure the adequacy of the premium you paid. Workers compensation and general liability insurance policies are the most likely types of insurance to be audited. The best way to avoid surprises at audit time is to be prepared. The audit process can be complex, and you don’t want errors or delays to occur due to lack of preparation.
Here are a few tips to help you get ready now:
• Contact your insurance company today and ask for a list of records their auditor will require. Some records may be easily and quickly obtainable, while others may require some time to retrieve (such as tax records).
• Review any class codes currently applied toward your business’s operations. Discuss the codes with your insurance agent to determine if any changes need to be made.
• Organize all subcontractor payment information and certificates of insurance received from them.
• Ask your insurance company for guidance on which factors will be included or excluded from payroll.
Preparing for an audit may also help you identify any weaknesses or processes that need to be addressed, so be thorough!
