Shortly after the completion of your audit, you’ll receive your Final Audit Bill from your insurance carrier that will indicate if you owe more money or get a refund. If you owe an additional premium, you have 30 days to make full payment. If payment is not made within 30 days, the insurance carrier can instigate collection proceedings for your audit and in addition, they can cancel your current policies.
In other words, time is of the essence. If you’re going to dispute your audit, you should notify your agent in writing within two weeks of receiving your Final Audit Bill.
When verifying your audit for accuracy, you should always request a copy of your audit worksheet. Your audit worksheet is the detailed record of your audit that indicates the information that the auditor collected including payrolls for each non excluded owner by class code, payrolls for each employee by class code, and amounts paid to each uninsured sub by class code. Your auditor will not automatically provide a copy of the audit worksheet to your insurance agent due to privacy law concerns. However, if you want your agent to assist you in verifying your audit and in correcting mistakes, you should always request that the auditor forward a copy of the audit worksheet to your insurance agent.
When checking your audit worksheet for mistakes, there are several types of common errors that you need to be on the lookout for. The first is when a payroll charge is incorrectly made for an owner who’s excluded under Work Comp. The second is when the wrong classification has been assigned to an owner, employee, or uninsured sub. The third and most common is when an insured sub is being charged as an uninsured sub. This is easily correctable by collecting the certificate of insurance for the sub and forwarding to the auditor. The fourth is when the auditor allows an inadequate materials credit when the sub’s invoice doesn’t break out labor vs materials. This should also be easily correctible by asking the sub to provide a detailed breakout on an updated invoice.
The fifth and final common error is a math error when the audit worksheet shows an incorrect number for a payroll, amounts paid to an uninsured sub, or amounts paid to an insured sub. Or, there can be a math error in totaling a row or column.
If you bring any of these errors to the attention of the auditor and can substantiate your argument, the auditor will be glad to correct any mistakes.