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Premium Audits
Audits are completed on various insurance policies including General Liability (written by itself or part of a Commercial Package Policy), Businessowners, Workers' Compensation, Auto, Garage and Reporting policies. The premium charged for these policies is often based on estimated exposures. The purpose of the audit is to determine the actual exposure(s) and then adjust the premium accordingly.
Policies with the following exposures are often subject to audit:
- Payroll
- Gross Sales
- Total Costs -
This exposure is
often found in
policies issued to
contractors who use
insured
subcontractors
- Admissions -Is
the total number of
people attending an
event other than an
insured’s employee
- Members -
Is the total number
of people belonging
to an insured’s
organization
- Gallons - Is the
total number of
gallons (such as
gas) sold
Audits are usually held within 30 days of the policy’s expiration. The auditor will need to review various records (such as State Unemployment Tax Returns, Federal 941s, payroll records, Certificates of Insurance, Profit and Loss Statements, etc.) to determine the actual exposure(s). The auditor will also ask about an insured’s business operations, employees, and their duties. This information is needed to ensure that a policy is classified correctly and that an employee’s payroll is allocated to the proper classification.
Audits may be conducted by an employee of Harford Mutual
or referred to a Premium Auditor or an Independent Audit Company. The following is a list of Premium Auditors and Independent Audit Companies:
- Greta Hittle, Premium Auditor
- ISI Insurance Services
- Randy Pugh, Premium Auditor
- RLD Associates, Inc.
Understanding Your Insurance Premium Audit
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