Restoration Insurance: Preparing for an Insurance Premium Audit

As a restoration contractor, you can anticipate that your insurance company will conduct an annual premium audit. Insurance companies conduct audits to ensure the premiums you’re paying are in line with the amount of coverage they’re providing.

The auditor’s initial contact is either by phone or mail, and you’re generally given a week or two to prepare. The auditor will let you know in advance what records need to be examined to have those documents available. In most cases, you can’t deny the auditor access to requested records; chances are, there’s a clause in your policy stating that by purchasing the coverage, you agree to the audit process. If the auditor finds evidence of fraud, it’s reported to the insurance company and the state government’s appropriate investigative unit.

Here are some tips to make the auditing process go smoother:

Have all requested records available. If, for example, your accountant maintains certain records, either bring them into your office or arrange for the audit to be conducted at your accountant’s office.

Get certificates of insurance on any contractors not covered by your workers’ comp policy. Be able to prove that any contract labor source doing work on your premises or your behalf has coverage, or you may have to pay additional premiums based on those labor costs.

Discuss record-keeping procedures with your insurance agent and accountant. Proper bookkeeping may reduce your workers’ comp premiums. For example, you may be entitled to a partial credit against your total payroll for those hours when you pay over time.