Getting Ready for a Yearly Work Comp Audit

Your company's actual workmans comp insurance premium is calculated from the yearly workers comp audit performed by the insurer. Your insurance premium can vary dramatically from the estimated insurance premium used to determine the original policy.

To expedite the process, assign one person as the sole contact for the auditor. This will avoid miscommunication. Select a person who is closely familiar with all departments and workers, as well as the payroll information.

Have information about the specific job needs performed by a certain office or by individual employees available.

Anticipate all inquiries to gain an advantage and ensure that you can offer correct details to the auditor. You don't need the auditor to make any guesses because she will always choose the workmans comp codes that will likely be more favorable to the workmans comp insurance company.

Ask for the work papers for the previous year's audit for the contact person to check with your prior years audit billing statements. This will jog his or her recollection from the prior audit or show her the sorts of information the auditor is looking for). At any rate, it's a great preparation tool, sort of like preparing for a test.

Ensure that your payroll records obviously specify which hours were paid as overtime so that he doesn't mistake that pay with straight hourly salary. If your company uses sub-contractors or independent contractors, ensure you have proof that the contractor have their own workmans comp insurance. Without that evidence, your premiums will likely increase, as you could be liable for their risk exposure.

If you use a staffing agency, those employees are the responsibility of the agency and usually will be covered under the agency's workmans comp policy. Ensure your records and make sure to differentiate between employees, contracted temp employees, and independent contractors.

If you are in the construction industry, or a similar industry, don't forget that you may use multiple workmans comp classification codes and allot one employee multiple classification codes. Documentation must show the particular hours staff spent in each of the different workplace exposures. If you don't then, every employee will be put into the highest class code possible.

The bottom line is you need to understand how the insurance companies operate. Their goal is to charge you as much as possible with out losing your business. The thing you need to understand is that they constantly make mistakes and you have to be on the watch out for them.

If you're not fully ready or you're not familar with the system, seek out the advice of a specialist or start reading up on your workmans comp knowledge. It could mean the difference between saving and spending a lot of money.

It's a lot to remember. Talk to a private auditing company to help prepare for your annual work comp audit.