Premium audit preparation checklist (free PDF)
A one-page checklist for getting your subcontractor insurance records in order before a workers' compensation or general liability premium audit. Run it 60 days before your policy year ends, and again before the auditor arrives.
When to run it
Run it 60 days before your policy year ends, and again before the auditor arrives. Sixty days leaves time to ask for a missing or expired certificate while the subcontractor can still be reached. The sheet has a place at the top for the day the policy year ends, the audit date, the carrier or auditor and who prepared it, and a date and initials beside each line.
It depends on the carrier and the state
The checklist
- Pull a list of every subcontractor paid during the policy year, with the total paid to each
- Match each one to workers' compensation and general liability certificates for every date worked
- Chase missing and expired certificates now, while the subcontractors can still be reached
- Collect exemption certificates for sole proprietors who are legally exempt
- Flag any subcontractor who had no coverage, and estimate what the charge could be
- Put the certificates in one folder or system, organized by subcontractor
- Ask your broker to review the biggest gaps before the audit
- After the audit, read the auditor's worksheet line by line and dispute any error
For the fifth line, the premium audit exposure calculator gives an estimate of what a workers’ compensation audit could add for subcontractors with no certificate on file.
What auditors ask for
Workers’ compensation and general liability premiums are set from estimates at the start of the policy year and corrected at the audit from the real figures. For each subcontractor you paid, the auditor looks for proof that they were insured for the whole time they were paid. Where there is none, the auditor may add that subcontractor’s payroll, or what you paid them, to the figures your own premium is worked out from. The proof usually means:
- A workers’ compensation and a general liability certificate for every date the subcontractor worked for you.
- The renewal certificate for any policy that expired during the job.
- An insured name that matches the name on your payment records.
- State exemption documents for sole proprietors who are legally exempt.
- Records kept by subcontractor, so that payments can be matched to coverage quickly.
The guide to workers’ compensation audits and uninsured subcontractors explains how the charge is worked out.
Common mistakes
| Mistake | How to avoid it |
|---|---|
| One certificate on file for a subcontractor of several years | Collect every renewal and keep them all, not only the latest |
| Certificate collected after the work started | Require coverage before the subcontractor starts and before the first payment |
| Name on the payments differs from the name on the certificate | Match legal names at onboarding, and update your records when a company changes |
| No records for small or one-time subcontractors | Apply the same rules to every subcontractor, whatever the contract size |
| Scrambling for documents during the audit | Keep one folder or system that is always current |
After the audit
You can ask for the auditor’s worksheet and dispute what you believe is wrong. The route and the deadline depend on your state and your policy, so ask your broker as soon as the bill arrives. If you find a certificate after the audit that proves coverage, send it to your broker and ask for the audit to be revised.
Related
Check every certificate against your own requirements, not a standard set.
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