Are insurance audits mandatory?
Most states require insurance companies to audit a majority, if not all, of its policies. Also, keep in mind that if your policy expires, your insurance carrier still has the right to audit you. For statement or phone audits of expired policies, we’ll typically notify you a week or two after your policy expires.
What is the point of an insurance audit?
An insurance audit is the carrier’s way of determining how much risk they actually insured over the past year. The company could’ve undergone a drastic change over that whole year your policy was in effect. Several factors determine the premium carriers charge for general liability (GL) and workers comp insurance.
How far back can an insurance company audit?
Most workers compensation insurance company audits will go back as far as 5 years, but there are a few that will only do 3 years. This audit process can generate an additional premium owed, or a returned premium, based on your final payroll numbers.
What happens if you ignore insurance audit?
If you do not fulfill the request within a reasonable time (usually 30 days), the insurance company may estimate your prior year’s figures – almost certainly on the high side – and charge you an additional premium. Or the company may simply choose to cancel your coverage.
What happens if you don’t pay insurance audit?
Once the insurance company has completed it’s final audit, with your cooperation or not, they will send you the bill and expect payment. If you don’t pay the premium audit bill they will turn it over to a collection agency or attorney for action.
Can insurance companies audit you?
The insurance company may perform a premium audit to ensure that you only pay a premium based on your actual risk exposure. An accurate audit at the end of the policy term will adjust your final premium up or down when reconciled against the initial premium deposit.
How long does an insurance audit take?
Most audits are completed within 90 days of your policy expiration. Promptly providing the requested supporting documents to your insurer may expedite the process. Your insurer will provide an explanation of your audit results.
What do you need for an insurance audit?
Information Needed for an Insurance Audit
- Description of company operations.
- Officers’/Owners’ names and titles.
- Employee names and job duties.
- Number of employees at each location.
- Names of subcontractors and certificates of insurance for subcontractors.
How do you survive an insurance audit?
Here are five key tips for surviving a premium audit.
- Track Your Payroll and Sales Information — and Keep Them Up to Date. …
- Classify Your Employees Correctly. …
- Keep Organized Financial Documents. …
- Assess Your 1099s. …
- Complete Your Audit Filings On Time.
How often do insurance companies audit?
Generally, a policy is audited every year, but some policies may be audited every third year. When will the audit be done? Within 90 days after the expiration date of the policy period so that any premium adjustments may be processed into your premium billing cycle.
How long does an insurance company have to recoup an overpayment?
Except in the case of fraud, the insurance company must make any request for an overpayment reimbursement in most states within 365 days from the original payment.