Workers Compensation Audits Rules
We received this question recently from a manufacturer in California. The number of Workers Compensation audits that can be performed by a carrier should only occur once per policy year. The Workers Comp policy that you have received from the carrier should have all the Workers Comp audit rules in it. It is usually in the last few pages. Each state has its own set of Workers Comp audit rules.
A very interesting fact we have noticed is that some agents have included on the policy that a certain insured should be audited more than once per year.
If your company is being audited more than once per year, check your insurance policy to see if more than one audit has been scheduled for the policy year.
At the next renewal, request that your agent change the frequency of audits to reduce the number of audits per year. Some carriers require that certain employers be audited more than once per year. Those are rare.
In reality, the insurance carrier may perform an audit at any time during the policy year and for the last three policy years. Usually, Workers Comp insurance carriers will not audit for the prior years and instead center on the policy that has just expired.
We heavily recommend that you do not try to ignore the audit requests by the carrier or any audit billing. If you do not allow the insurance carrier access to your company’s payroll records, the insurance company may cancel your policy and charge a very huge penalty until they are allowed access to your payroll records.
The auditor has a time limit to perform the audit. If there is a large delay, the premium auditor may just do an estimated audit and then triple the premium owed as a penalty. This is allowed in every state’s insurance laws and rules.
Even in a very bad economy, insurance carriers will likely let you pay off an audit bill over time. Please make sure that you call the carrier before the due date of the bill if you are unable to pay it in full. If you are disputing any part of the work comp audit bill, it is a good idea to pay the undisputed part of the premium. It is not only a good idea but is required by the rules.
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