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ARI Blog: Article

Restoration Insurance Tips: Top 3 Ways to Save Money on Your Workers Comp Audit

Workers compensation audits are never fun. The unknown of exactly what documentation to provide, the anxiety of the potential premium increase, and the time dedicated to preparing for the audit can create a stress situation.

Here are three tips to help your restoration company save money on your next audit:

1. Payroll Separation: If your policy has more than one classification code, then it is worth the time and energy to split all of the payroll among the right classifications be employee. Otherwise the auditor will assign all payroll to the highest-rated (and most expensive) classification.

2. Remove Overtime Pay: In certain states, you can deduct the premium portion of overtime pay from the gross pay in calculating payroll. For example, if an employee is paid a regular rate of $10.00 per hour and receives time-and-a-half for overtime, the employee’s pay rate is $15.00 for each overtime hour. The $5.00 for each overtime hour can be deducted from your gross payroll as long as it is shown separately on your records. You must show overtime separately for each classification.

3. Certificates of Insurance: Have certificates available for the audit (at your premises or your accountant’s) for any subcontracted work preformed for your company during your workers compensation policy period. Without certificates of insurance, the auditor can (and will) charge your restoration company additional premium on your policy to cover the subcontractors. Additionally, it’s important to make sure all of your subcontractors carry the same liability limits as your policy.

By following these three items, you can help your company potentially save thousands on its upcoming workers compensation audit. If you have any additional questions on how your restoration company can prepare for an audit please contact our office.

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