Premium audit,
defined.
A premium audit is a carrier review, usually at the end of a policy term, that compares the exposures estimated at the start of the policy with what actually occurred, such as payroll or sales. The carrier then adjusts the premium up or down. Premium audits are common on workers compensation and general liability policies.
Why premium audits happen
Many commercial policies are priced on estimated exposures, so the audit reconciles the estimate with actual figures and produces an additional charge or a refund.
Agencies help clients prepare for audits by gathering accurate payroll and sales records, which can prevent surprise charges.
Common questions
What triggers an additional premium after an audit?
If a policy's actual exposures, such as payroll or sales, were higher than the estimates used to price it, the premium audit produces an additional premium. If they were lower, the insured may receive a refund.
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