It’s a moment you may have had a nightmare about. You hear three words and your stomach gives a nervous squeeze. “You’re being audited.” Yikes!
Most people only think of an audit as the government coming in with a fine-tooth comb to inspect a business or individual’s operations. Audits, however, can be done by many types of entities providing service, such as the company you purchase your insurance policies from.
If you were just notified that you are required to complete an audit for your insurance policy, don’t panic! We’ve been there. Done that. What can you do to prepare for an audit such as this? We are ready to help you navigate these unsure waters with confidence.
Why Do I Get Audited?
Understandably, insurance companies like to assure that the information they’re using is as accurate as possible. They use this information to generate the rate they charge for various policies, so it’s in everyone’s best interest to confirm that the rate is neither too high or too low.
All Workers Compensation and most General Liability policies are auditable policies. Workers Compensation is based on gross payroll figures. General Liability is based on payroll, sales, cost, and area or number of units, according to the exposure.
How Do I Prepare?
The best way to avoid receiving an additional audit premium, at the end of your policy term, is to make sure that you have the information on your policy current and as accurate as possible. Your insurance policy is an “estimate” or “best guess” of what you feel your exposure is going to be for the policy term. Therefore, six (6) months into the policy, you should gather your exposure information and multiply it by two (2). This will give you an estimated annual number for your exposure. Now take that number and compare it to the figure on your policy for that exposure.
Additional Tips for Staying Organized
This sounds simple enough, but in the myriad of daily problems to solve and issues to confront with a business, the task of evaluating your data can get lost in the shuffle. Here are some suggestions to keep the numbers from getting off track:
- Set up reminders in your smartphone calendar as well as write reminders on paper calendars to check the data quarterly.
- Create an internal audit team. The team would meet quarterly after the exposure information is updated to determine how the actual data compares to the estimate. After everyone looks at the numbers, the decision to contact the insurance company to make an adjustment may be clearly needed or not needed.
- If the team is unsure, give us a call. If your number is higher or lower than the insurance policy figure, give us a call. We will discuss your options with you so you can make an informed decision as to what is best for your company. We will be happy to assist your company in determining the best route! Call toll-free: 877-888-5506.
How to Get Help for an Insurance Audit
Need help preparing for your next insurance audit?
Contact our team at Kincaid Insurance today. We can offer you some helpful tips and even provide some alternate coverage options that might fit your needs. We’ve helped businesses for over a decade with Workers Compensation and General Liability audits, especially those in Evansville, Newburgh, Jasper, Washington, Mt. Vernon, Henderson, Owensboro, Rockport, among others.Request a Free Quote