What is the purpose of a business insurance audit?
We all know that throughout the year our business can change from where we started out the year. This could have a major effect on your insurance exposure and change your liability exposure. Typically the more sales you have the more risk you have. So as sales go up, so does the possibility of a claim. The audit determines if the insurance company is adequately covering you for your risk, or if some adjustments in your premium is needed. Sometimes the risk goes up and more premium is owed to insure that risk.
When do audits occur?
Typically an audit will occur is at your policy renewal, or shortly after. Just like an audit of your taxes the insurance companies are looking to get info on your annual sales for the prior year to see if their collected premium is equal to the insurance risk. If your sales estimates were accurate at the beginning of the policy period there should be no additional premium due. If your sales were higher than estimated and increased your risk exposure then you may owe some additional premium.