What is a Premium Audit?

May 11, 2010

An accurate premium audit is a benefit to both the insurance company and your business. An initial premium for some policy types is estimated at the beginning of a policy period based on past records of its operations. Policies with variable or fluctuating exposures, such as payroll, total cost, sales/receipts, etc. will have estimated exposures when written. After the policy period ends, a premium auditor conducts a premium audit to determine what the exact insurance exposures were during the policy period. If necessary, the insurance premium is then adjusted upward or downward to reflect a business’s actual exposures. Below is a sampling of the typical records the insurance auditor may want to review:

Payroll records
Employee records
Sales Journals
Cash disbursements
Certificates of Insurance

Usually polices such as workers compensation, general liability, garage liability and others are audited. Insurance carrier employees conduct the audits whenever possible.

Call a sales executive or customer service representative if you have questions or concerns about the business insurance premium audit process.