Ieuter Insurance Group Blog

All You Ever Wanted to Know About Insurance

What is an Insurance Audit and Why Do I Need to Do It?

The word audit can be scary for most people – it creates the image of endless hassle and paperwork in almost everyone’s mind. However, if you’re a business owner it’s important to understand that insurance audits are not only necessary but they can help keep your premiums under control!

Insurance audits are a routine part of commercial insurance policies such as general liability, garage liability, and worker’s compensation. When these types of policies are issued the premium is based on that year’s estimated exposures. Factors include employee payroll, gross sales, and cost of sub-contractors. When the policy term ends, the insurance company will contact the business owner to complete an audit. The purpose of this is to confirm the exact total of your business exposures for the year. The premium is then adjusted based on the actual numbers for the year provided in the audit. 

Please note! It is important to remember to provide certificates of insurance for all of your subcontractors when completing the audit. The certificate must cover the full period of when the subcontractor worked for you. Keep in mind this could mean providing certificates that cover two different policy terms from the subcontractor. If you are ever unsure of the process or what information you need for an audit please give us a call.

Your friends in the insurance business are always happy to help!