If there’s one part of workers’ compensation insurance that catches business owners off guard, it’s the annual audit.
I can’t tell you how many times I’ve had someone call me after receiving a surprise bill for thousands—or sometimes tens of thousands—of dollars. Most of the time, it wasn’t because they did anything wrong. They simply didn’t understand how the audit worked.
Here are the biggest mistakes I see.
1. Ignoring the Audit Request
If the carrier can’t complete the audit, they’ll often estimate your payroll instead of using your actual numbers. Those estimates are frequently much higher than your actual payroll.
2. Waiting Until the Last Minute
Gather payroll reports, quarterly tax filings, W-2s, and requested documents as soon as you receive the audit request.
3. Misclassifying Employees
Classification errors can significantly increase your premium. Review employee duties with your broker before the audit is finalized.
4. Not Keeping Good Payroll Records
Organized payroll records make audits easier and help avoid unnecessary premium increases.
5. Assuming Every Dollar of Payroll Is Chargeable
Items such as overtime premiums or reimbursable expenses may be treated differently during the audit when properly documented.
6. Not Reviewing the Audit
Review payroll, classifications, officer exclusions, experience modification, and all adjustments before accepting the audit.
7. Not Asking for Help
If an audit was based on estimated payroll or inaccurate information, additional documentation may allow the carrier to revise it. I’ve helped clients reduce premiums by reopening audits with proper records.
Final Thoughts
Workers’ compensation audits don’t have to be stressful, but they do require attention. Keep accurate payroll records, respond promptly to audit requests, and review the final audit before accepting it. A little preparation can save your business thousands of dollars.
If you’ve received a workers’ compensation audit that doesn’t look right, I’d be happy to review it. At Goldbridge Insurance Services, we help businesses make sure they’re paying the premium they actually owe—not a dollar more.
Need help with a workers’ compensation audit?
Contact Goldbridge Insurance Services for a complimentary audit review.
Call (888) 590-2667 or email info@goldbridgeins.com.
Goldbridge Insurance Services · 15840 Ventura Blvd, Suite 203, Encino, CA 91436
