More challenging than obtaining and understanding a workers’ compensation insurance policy is preparing for the annual work comp premium audit associated with it. Audit preparation truly begins with the policy origination phase and the proper structuring of key policy components to insure the best possible audit results.
The Purpose of Workers’ Comp
Workers’ compensation insurance is a federally mandated program for businesses, designed to protect employees in the event work-related injuries or disabilities occur. While the U.S. Department of Labor administers and oversees policies at the federal level, each state has its own guidelines.
Why the Audit?
A workers’ comp policy generates a cost premium determined by annual payroll estimates according to employee job classifications. Since this premium is associated with estimated payroll, an annual audit compares actual payroll to estimated payroll to determine if money is owed or a refund is due.
Best Audit Results
Due to the complex nature of workers’ comp policies, businesses should align themselves with a seasoned administration specialist when securing a policy. These specialists will advise how to best structure a policy in terms of coverage, employee classifications, payroll exclusions, and other factors associated with premium determinations. Utilizing these strategies in the policy origination phase insures the best possible annual audit results.
The services of an experienced worker’s comp policy broker are essential to effectively navigating the audit terrain. They will advise on cost-effective policy structure and best practices for audit protocol designed to help businesses keep more of their hard-earned money.