As a business owner, undergoing an audit of your workers’ compensation insurance policy is an important part of maintaining accurate coverage levels and rates.
However, as you may know, not all audits will be conducted the same way – insurance providers utilize a number of different methods.
Let’s take a closer look at the three primary types of workers comp insurance audits to help you prepare accordingly.
1. Voluntary Audits
For smaller policies, many insurers opt for a voluntary audit approach. With this method, the insurance carrier will mail you an audit form to complete yourself using documentation like payroll records, quarterly tax filings, and employee lists. You then return the form via mail, email, or fax, and the auditor reviews it remotely.
While requiring self-reporting of information, voluntary audits allow for a simple, convenient process without an on-site visit. Just be sure all documentation is organized and complete to avoid follow-ups.
2. Remote Physical Audits
A step up from voluntary audits, remote physical audits involve sending payroll records and related documents directly to the auditor rather than a form. The insurance provider will request documentation like 941 payroll tax filings and unemployment insurance reports by mail.
An experienced auditor then examines these off-site to evaluate your policy. Remote physical audits provide a higher level of scrutiny than voluntary but still avoid an in-person meeting.
3. On-Site Physical Audits
On-site physical audits represent the most thorough examination method. Here, the auditor will contact you to schedule a visit to your business location(s). During the on-site audit, the representative evaluates payroll records on-premises and may observe operations firsthand. They can ask questions and collect additional contextual details in real time.
While requiring an appointment, on-site audits offer insurance carriers the most comprehensive view of a policyholder’s business.
Choosing the Right Audit for Your Business
In many cases, the insurance provider dictates the audit type based on policy size and risk factors. But communicating with your agent allows for providing context that could help determine the best-fit approach for your unique operations.
Consider choosing an on-site audit, for example, if you have multiple locations or contractors to explain. A voluntary option may suffice for a simple single-site business.
Following Up After the Audit
Regardless of the audit method, be sure to review the final documentation for accuracy before signing off. Query any discrepancies discovered with the auditor. Request an updated policy if adjustments are made from audit findings, too. Staying involved after the audit ensures having the right coverage and rates in place going forward. Don’t hesitate to exercise options to appeal adjustments if truly unwarranted.
Preparing for the Different Types of Workers Comp Insurance Audits: In Summary
Regardless of audit type, advance planning eases the process. Key documents should be organized digitally and physically well before the workers’ comp insurance audits occur. Details on employee duties and contractor work may also prove valuable to auditors. Don’t hesitate to reach out with any audit-related questions to your insurance agent or specialist like EMPLOYERS Insurance for more information on the different audit options and requirements.
