A necessary part of commercial insurance is the inevitable audit. Every company is different, but these few tips should help you save time and money on your next insurance audit. Remember, with good documentation most insurance audits should not last longer than 30 minutes!
Documentation
Keep proper payroll records and have them readily available when your current policy is set to renew. Along with payroll, have good documentation on how many hours, days, weeks your employees were working.
Keep an accurate sales journal indicating all the items that you sold rented or leased during the policy year. Don’t forget to include monies spent on repairs! A good sales journal will also keep tax dollars separate, to properly exclude from potential premium changes.
Subcontractor
It’s important to keep all certificates of insurance on file for any subcontractors used during the commercial insurance policy year. This is very important, because you will be charged for employees of those subcontractors not providing certificates as though they
were your employees. Save yourself an audit headache and ask for the certificates before work begins.
Save on Premium
If you have employees that earn tips, be sure to track those dollars separate. During the audit provide documentation showing that the tips are not included in the employees gross payroll.
Have employees that ONLY drive? Keeping their salary separate and documented can help on your general liability exposure. However, this must be documented and their salary separated.
Why am I having an audit?
Commercial insurance premiums are generated based on assumptions of your business. Your yearly premium for general liability, garage liability, workers compensation and umbrella are typically based off of an estimate of exposures like payroll and sales. Businesses will grow or fall during a policy period, so an audit is a way for insurers to remain competitive if a discount is required or additional premium cost. Remember, documentation saves time and money!
If you have a commercial insurance policy question, be sure to give me, Christopher Davidson a call!
