Audits are a key element of any workers compensation policy. Not only do they ensure you’re paying the right amount of premium, but the process can also reveal potential savings. A professional auditor accompanies you on every step of your work comp audit journey. Here are ten terms and phrases you may hear during your first experience.
1. Audit
An audit is a process that determines if you are paying the right amount of premium for your work comp policy.
2. Payroll
Payroll is money, or substitutes for money, paid by an employer for services to individuals who could receive workers compensation benefits.
3. Premium
Premium is the dollar amount charged for coverage. This amount is based on payroll, applicable class codes and rates.
4. Consultation
At Previsor Insurance, new policyholders may be eligible to meet with a consultant during their first three months of coverage. They’ll work closely with you to help you set up your records, identify classification codes and answer any of your questions.
5. Records
Records encompass the documents a policyholder needs to complete an audit. These include tax forms, ledgers and payroll documents.
6. Premium Debit
A premium debit is an amount of premium owed after an audit is complete. It may be the result of additional payroll added during the policy term. For example, hiring more team members increases payroll.
7. Premium Credit
A premium credit is given when an employer has overpaid on the premium amount. This may be the result of hiring fewer employees than planned. Auditors also award credits for severance, overtime and tips.
8. Certificate of Insurance
A Certificate of Insurance (COI) is a form provided by a subcontractor that proves they have their own work comp insurance. Auditors must include the wages of subcontracted employees in a policyholder’s payroll without it. This directly impacts premium costs.
9. Explanation of Audit
An Explanation of Audit is a short summary provided after the audit process is complete. Policyholders can request full copies of their audit at any time; this document serves as a snapshot of the overall results.
10. Dispute
A dispute is a formal process that begins if a policyholder disagrees with the result of an audit. An audit manager reviews the results and compares them to current rules and statutes.