For growing businesses, workers’ compensation insurance is a necessity to protect your employees as well as your organization. Part of your workers’ compensation insurance policy includes the carrier audit.

Depending on your type of business and the carrier that provides your coverage, audits can be performed annually, quarterly or sometimes even monthly. They can be conducted by mail, phone or in person with a scheduled visit to your premises. But no matter how or when an audit occurs, it’s important to be prepared.

Success starts with preparation
You may be contacted by your carrier or a carrier representative who will oversee the audit. But why wait for notification to start preparing?

For most companies, maintaining the required documentation is the biggest challenge, yet one of the most helpful ways to lessen the inconvenience and reduce the financial implications – with minimal headaches. With a system in place to stay organized all year long, you won’t have to scramble to collect the required information.

You can help expedite the audit process by having these documents on hand:

• Quarterly reports
• Payroll registers
• Timecards
• Federal tax records
• State unemployment reports
• Overtime pay by employee
• Payments to subcontractors and their certificates of insurance (if a subcontractor provides materials as part of a job, be sure the invoice specifies payment for work and materials separately)

Once you have all the necessary documentation, designate a main contact person for all audit-related matters. Be sure to assign an employee who has thorough knowledge of your business operations so they can be as helpful to the auditor as possible.

Remember: If the auditor is unable to reach you, your carrier will automatically estimate your payroll. This may result in additional costs and/or the cancellation of your current policy. By working closely with the auditor, you can help your workers' compensation policy and premiums be as accurate as possible and prevent any disruptions in your coverage.

Finally, make a point to regularly check the accuracy of employee classifications and follow your state's rules for owners and officers. A simple error could possibly mean an additional premium payment at audit time.

A workers' compensation carrier audit can be a complex process for any growing business to grasp. By staying organized and on top of the details, your business can benefit and lessen the impact of the audit.

Automatic Data Processing Insurance Agency, Inc.