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Payroll Audit and a Premium Audit – What Is The Difference?


Payroll Audit and A Premium Audit – Differences (Not)

Is a Payroll Audit and a Premium Audit different?

Picture Of Payroll Audit and a Premium Audit Calculating

I usually receive this question approximately once per month by email. I thought I would address the differences between a payroll and a premium audit.

Actually, there are no differences between the two terms. A premium auditor performs a premium audit that is also known as a payroll audit. One thing for employers to remember is that premium audits are much more complex than just examining the payroll.

There are many areas the Workers Comp premium auditors cover such as (Most of these terms are covered here):

  • Classification Codes
  • Standard Exceptions
  • Subcontractors
  • Certificates of Insurance
  • Experience Modification Factor (EMod or XMod)
  • Premium Discount
  • Scheduled Debit/Credit
  • Insured Locations
  • Other Operations
  • Policy Endorsements
  • NCCI or State Rating Bureau Info
  • Prior audits – if you have the same carrier as the last policy period
  • Other info – website, brochures, etc.
  • Drivers Expense Logs
  • Job Duties / Descriptions
  • Ownership Info
Picture Payroll Audit and a Premium Audit a Gold Credit Card

I wanted to supply my blog readers with this list as often we hear the word payroll audit.. As you can see from the list, there is much more being examined than just your payroll tax figures.

There is nothing negative concerning a review of the above info. The premium auditor has a right to see just about anything that your company has on file.

One surprising fact is that almost all employers think the premium auditors are actually employees of the insurance carrier. That is often not the case. The premium auditor may very likely be working for a premium audit company instead of a direct employee of the carrier. This fact really makes no difference in the audit. Most auditors will give you their business card upon arrival.

There is one caveat to providing all this information. I will cover that next time.

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James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications


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