What Is a General Liability Insurance Audit?
A general liability insurance audit examines your business’ payroll and risk exposure. An audit makes sure you’re paying the correct amount for general liability insurance, and that you’re getting the right amount of coverage for your business.
What Happens in a General Liability Insurance Audit?
The word “audit” may sound stressful, but don’t panic. At the beginning of the year, you pay a certain amount for general liability coverage. If you’re asked to go through an audit at the end of the year, an auditor from the insurance company will contact you and reviews your business’ payroll and other documents to determine if the premium you paid was accurate.
A general liability audit looks at:
· Your business’ gross sales
· Job duties of employees and independent contractors
· Changes from the prior year
· Depending on the audit results, you could have additional premium due because you needed more coverage, so you’ll have to pay the difference.
Preparing for a General Liability Premium Audit
Having the necessary documents and information can make for a smooth audit. Some documents you may need include:
· Payroll or sales reports
· Certificates of insurance
· Tax documents
· Subcontractor or independent contractor documents
What Is the Purpose of a General Liability Insurance Audit?
An audit ensures your business has the right amount of general liability insurance coverage. Your business can change a lot from year to year. For example, if your sales increase, you may have to hire new employees to help with increased demand. Or, you may have downsized around the holiday season, so you had fewer employees at the end of the year. In either case, you may need to adjust your coverage amount based on the changes to your business.
Do I Have To Do an Insurance Audit?
Insurance companies may perform an insurance audit at the end of the year for:
· General liability insurance
· Workers’ compensation insurance
· Commercial property insurance
If you’re notified of an insurance audit, it’s important to send your insurance company any documents or information they ask for. Completing a general liability insurance audit, or any type of insurance audit, ensures you’re paying for and getting the right amount for coverage.
Be aware that if you don’t complete an insurance audit, your insurer can:
· Charge a premium increase. In some cases, this can be a significant amount.
· Cancel your policy, leaving you without coverage.
· Report you to a collection agency if there’s a balance due on your premium and you don’t pay it.
If you have any questions or concerns in regards to General Liability insurance audits do not hesitate to contact us at (425)212-3505.