An organization’s auditing or inspection process is done for the quality check. A review of records annually is necessary when discussing EMPLOYERS Workers’ Compensation Premium Audits. One should not escape from the annual audit process for worker’s comp. insurance. Else you might land up paying heavy fines and risks.
Worker’s compensation insurance is a form of coverage an employer provides to employees with work-related injuries. It ensures the employee that their medical bill is resolved and lost wages are taken care of. As a result, an annual audit of comp. insurance is necessary.
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What is a workers compensation premium audit?
Insurance service providers will perform a yearly workers’ compensation coverage examination. One example is EMPLOYERS Workers’ Compensation Premium Audits. It ensures that you have paid the right coverage for every worker.
Workers comp. insurance is mainly based on three things.
- Number of employees
- Amount of risk involved in the business you own
These details change every time, especially when you own a small business. For example, you might be adding or losing employees in a short period. Initially, you give an approximate payroll for the coming year. But it usually happens that the scenario changes by the end of the year.
The service provider uses payroll to get your initial premium. The worker’s compensation premium audit process checks for all the changes, assesses your business statistics and compares them with your initial estimation.
Things you should know about worker’s compensation audits
As per laws, it is mandatory to have an annual audit. Auditings answer the question that your payroll estimation initially matches the numbers at the end. It is required to get information about the new hire and their insurance coverage.
Types of audits
There are multiple kinds of audits which are as follows:
MAIL AUDITS: as the name says, you receive an audit form through the mail and have to provide all the details (whatever the service provider asked for) along with a duly filled form.
PHONE AUDITS: in this type, you must provide all the information through the mail. It is usually done in medium-sized businesses. The only change is that you will receive a call from the service provider, and they will ask for details of all that you have submitted.
PHYSICAL AUDITS: when a representative from the insurance company visits your organization, these types of audits are called physical audits. They will thoroughly check all records and have a detailed in-person conversation with you. Such audits are usually done for large businesses or companies or if there is doubt of some fraud.
If you skip the process or do not complete them thoroughly, you might face some problems. The legal action insurance company can take action against your company as per laws. Penalty in terms of money varies as per state. But you might end up paying huge fines if the service provider found you to be uncooperative during the audit.
Audits are crucial business tasks. They can make you nervous, but they are manageable. Just make sure that you maintain all the records honestly. Staying organized is the key to the seamless audits. Keep the documents like payroll records, overtime payments, certificates of insurance of subcontractors, or descriptions of business operations ready at the time of the process. Keeping these things in mind will make the entire process smooth and hassle-free.