A commercial premium audit is a review of a policyholder’s operation and records to determine the actual insurance exposure for the coverage provided. The need for premium audits arises because many insurance policies, including Workers’ Compensation, General Liability, and Contractor policies are based on estimates when underwritten. These policy types provide for an adjustment of the premium according to the exposures actually incurred during the policy term. The premium auditor is responsible for measuring the exposure base accurately and classifying it properly according to the manual rules.
Donegal Insurance Group conducts a premium audit on all commercial new business (with auditable exposures) within 60 days of the expiration date of the policy. Preparing for the premium audit can save time and money by ensuring you receive an accurate audit. It is important that a principal of the business be available at the time of the audit to provide the details of the business operation and the employee’s duties.
During the appointment process, the premium auditor will make you aware of the records needed to perform the audit. Please be assured, confidentiality of your information is very important to us. The details contained on the audit worksheets are released only to the policyholder directly.
Examples of financial and business records:
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Payroll records of original entry
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Sales and receipts journals
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Federal 941 and state quarterly unemployment compensation reports
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Job cost records
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Subcontractor costs
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State sales tax returns
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Certificates of insurance for subcontractors use.
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Click here to learn more about Pennsylvania’s Act 72: Construction Workplace Misclassification Act.