What is a Workers’ Compensation Audit?

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✔ What is the purpose of a workers’ comp audit?
A workers’ comp audit helps the insurance company make sure that the projected payroll that you gave them in the beginning of the year was accurate. They’re also checking to see that the class codes you gave at the beginning of the policy actually match what your workers are doing.

✔ When do audits happen?
Audits usually happen at the end of the 12 month period, called the “term” of the policy, or upon cancellation of the policy. In the construction business, or in any of the more “risky” industries, they can happen as early as the first quarter of the policy.

✔ What are the two types of workers’ comp audits?
There are physical and mail-in audits. Physical audits include phone and in person audits. The auditor will reach out to you either by phone or by email to set up a good time for the audit. Mail-in audits consist of forms that you will need to fill out.

✔ What happens if you ignore a workers’ comp audit?
If that happens, the auditor will tell the insurance company that you are not compliant. This is called a note of delinquency and allows the insurance company to charge you 25% or more of your original bill.

✔ How can a bad audit affect you?
Bad audits affect policies in a few ways. If your estimate was off, your workers’ comp can increase and you can have a sudden big bill. You can also find that you won't be eligible for certain claims for coverage as a result of you doing things that you said you weren’t.

✔ How can you prepare for your workers’ comp audit?
Keep all employee info including payroll records and reports, owners and partner info including name, the state they work in, what percentage of the business they own how much they make. Also keep copies of all 1099 forms and certificates of insurance from your subcontractors.

//REMEMBER: No need to fear 😓- just prepare!
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⏱ Timestamp

00:00 What is a workers’ comp audit?
00:28 When does it happen?
00:51 What is the purpose of a workers’ comp audit?
01:18 Types of workers’ compensation audits
01:24 What is a physical workers’ comp audit?
01:44 What happens if you ignore a workers’ comp audit?
02:02 What is a mail-in audit?
02:14 What mistakes might be discovered during a workers’ comp audit?
03:03 How can a bad audit affect your workers’ comp policy?
03:35 What is needed for a workers’ comp audit?

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