Workers’ Compensation Premium Audit Checklist

Workers’ Compensation Premium Audit

Your Workers’ Compensation annual premium audit will determine whether your premium needs to be adjusted and make sure you are not paying more or less than needed. Continue reading to learn more about the process and how to avoid surprises.

Our Analysis

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What is an Annual Workers’ Compensation Premium Audit?

A Workers’ Compensation Premium Audit occurs each year. It is a review of your business records to determine if the premium you paid at the beginning of the policy period accurately reflects the same risks and exposures at the end of your policy period.  The Insurance Company wants to ensure that payroll and job classifications have not changed and there are no new entities, operations or locations. If these have grown, changed or decreased, you may owe additional premium or receive a refund.

Our Actionable Advice

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What payroll and tax information is needed?

  • Payroll records: W-2 forms and 1099 forms for contractors.  Specifically: employee name, description of work performed, state of employment, total gross wages per employee, separate overtime, severance, tips, etc.
  • List of job classifications for each job.
  • Tax forms: Federal 941, W2, W3 forms, State Unemployment Wage reports, 1099s, 1040c (Schedule C), 1120, 1065, etc.
  • Financial Statements: Income Statements and Balance Sheets.

How do I report Independent Contractors / Subcontracted work?

  • An independent contractor is someone who does business by providing a specific service for a predetermined price to several different customers and controls the manner in which the work is completed.
  • Information needed: Subcontractor name, description of work performed, state where work was performed, total amount paid, cost of materials supplied, does the subcontractor have employees or hired help?
  • Obtain and maintain up-to-date Certificates of Insurance from each contractor showing valid workers’ compensation coverage.
  • Maintain copies of contracts and invoices.

Can corporate officers be excluded from coverage?

  • Yes, corporate officers may be excluded in some states. If allowed in your state, contact your agent for the required Exclusion Forms.

How can I avoid surprises?

  • Prepare for your audit early. 
  • Classify workers correctly.
  • Notify your agent immediately if there are large changes (increases or decreases) in staffing.
  • Notify your agent immediately if you add a new entity, operation or location.
  • Don’t under-project your payroll.
  • Collect valid certificates of insurance from all subcontractors, as well as copies of contracts and invoices.
  • Have a clear and communicated process and timeline to file claims.
  • Report incidents in a timely manner.

The Big Takeaway

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The Whitlock Group is your trusted advisor on insurance matters.  We have over 30 years of expertise and experience managing and mitigating the costly impact of Workers’ Compensation risk.

For comprehensive business insurance solutions or if you’re unsure whether your business is covered adequately, contact us today.

Greg Whitlock, President
678-906-2008 ext 1200
Cell: 404-218-8706