Insurance Audits are a pain for all business owners and should not be ignored. Failure to complete an audit will result in the insurance company developing an estimate of your sales or payroll that is probably much more than you were previous rated at. The end result, usually a sharp increase in premium. A few small tips can help calm your nerves and get through the audit.

1. Make sure you know what basis your policy was rated on. This can be either payroll/employees/sales amount listed on the policy. In addition, be sure to know the territory (county or zone) that you are rated for. Rates usually vary by county.

2. Consider having the audit completed with your accountant. Most auditors will ask for standard tax filing forms and returns that are prepared each year. You may be required to bring invoices from jobs you completed or goods sold. Accountants are generally organized and prepared for these types of things. It is recommended that you consider an accountant who has experience completing insurance audits.

3. If you are comfortable completing the audit yourself, the following may help you in your meeting with the auditor.

4.  Always be as prepared as possible. Have your paperwork presented in an organized way. This makes the auditors job easier and thus will be less likely to give you a hard time.

5. Make sure you have certificates of insurance from any company that you hired to perform work for your customers if your in a service industry. If you sell or manufacture products be sure to obtain certificates of insurance from anyone that provided you with raw materials or goods. Example: Plumber hires and electrician to wire a boiler for a customer. The Plumber includes the electricians cost in his invoice. If the plumber does not obtain a certificate of insurance from the electrician than the cost on the electrician can be added to your rating basis as a result of the audit.

6. Invoices – make sure the invoice is clear on the location where the work was completed. An auditor will adjust the zone rating on your policy if 50% of the work was done in a different zone from the original rating.

Most businesses get better at this after going through a few audits.

Leave me a note if you have any questions.