The workers compensation audit process is a large and sometimes confusing part of buying a workers compensation policy. Unfortunately it’s usually something that doesn’t get discussed much at the time the policy is purchased. We often talk about mistakes the insurance company make but audit mistakes on the part of the employer often create serious problems between the employer, insurance agent or broker and the insurance company issuing the policy. So in this post we’ll talk about a few of the typical audit mistakes employers make.
Here’s a short list of employer generated mistakes:
- Not complying with an audit request – Yes, you have to complete the audit! It’s part of the policy. You agree to it when you buy the policy. It’s in the contract. And it’s the only way of determining the actual final premium. Got it?
- Assuming that you can separate payroll between class codes – Only under certain circumstance is an employer allowed to separate payroll. Making an incorrect assumption that you are allowed to separate payroll to only find out later you were wrong will typically result in having all payroll is shifted into a much higher rate class.
- Providing inaccurate unorganized payroll data – The auditors job is to gather data as quickly and as effeciently as possible from you and move on to their next client. Being unorganized can only lead to misunderstandings and confusion. Get your house in order and be prepared when the auditor comes a knocking!
- Pawning your audit off onto your bookeeper or accountant – Why would you do that without being there to answer questions about your company? I can’t tell you how many times we’ve picked up a case just because the owner of the company didn’t have the time to meet with the auditor, where serious mistakes were made in describing the work processes and materials used in the business operations resulting in a misclassification of the employers employees!
- Changing business operations without consulting with your agent – Happens all the time. A business that was correctly classified changes what they do only to find out at audit that those changes put their business into a higher rating class. Not that they wouldn’t make the change, but that they should have communicated with their agent or broker to find out the resulting effect.
We have a pretty good section on our website, Workers Compensation Consultants, that describe in detail many more common mistakes that are made on workers comp audits. So be sure to visit that section to learn more!
Hope this helps you out! Thanks!