Your insurer conducts a premium audit to become sure you have paid the proper premiums over the period of the policy for the insurance coverage you need.
By analyzing your company’s financial records, an insurance premium audit determines your actual risk exposure. Every year, your insurance company conducts an audit of your policy.
Typically, when you start a new insurance policy, you estimate your business costs, payroll, and income. Audits are performed by insurers or independent auditors at the end of policy periods to determine gross revenue and payroll data for individuals or businesses.
Auditing an insurance policy should follow several best practices:
To ensure a successful audit, it is crucial to plan ahead and collect all the necessary documentation in advance. Organize your records and documents so the auditor can easily access them. Despite the possibility of higher premiums, be honest about the business’ operations and risk management practices. You should ask the auditor questions if you have any concerns or if something is unclear.
As a general rule, an insurance audit is conducted to ensure that the insurer has the right insurance premiums in place to protect against potential risks. In order to ensure a smooth and efficient audit, businesses should follow these best practices.