auto insurance norwell MA gordon atlantic insurance homeowners insurance norwell MA gordon atlantic life insurance norwell MA gordon atlantic boat insurance norwell ma gordon atlantic business insurance norwell ma gordon atlantic
             Auto Insurance          Home Insurance           Life Insurance           Boat Insurance      Business Insurance

    Commercial Insurance Blog

    Workers Compensation Audit Compliance

    Posted by Geoffrey Gordon

    Fri, May 11, 2018 @ 12:19 PM

    Your Workers Compensation insurance renews and you receive the letter informing you it's time for the prior term's audit.  

    Initial premium is based on estimated payroll.  At the end of the year the company needs to determine actual payroll, including casual labor and uninsured subcontractors. If the actual is less than the estimate you get a refund.  If the actual is greater than the estimate, you owe the difference. 
     
    Business Man Pic
    When you purchase Workers Compensation insurance, part of the agreement is they may audit your payroll to be sure it's accurate.  It may be a phone audit, a self-audit, or a physical on-site audit, (physical is required in Massachusetts at least every three years).

    Should you refuse, it's rough: the carrier issues a high "estimate" with premium due. If you do not pay the estimated additional, your policy gets cancelled and the Department of Industrial Accidents may issue a Stop Work Order. You may also have an uninsured loss and then have to pay for medical expenses and lost wages out of pocket, plus be subject to a fine.  

    To prepare for the audit try to have:

    • Payroll records
    • Federal 941 Tax Returns (most recent four quarters)
    • 1099 Tax Forms 
    • Federal Tax Return including Profit & Loss section (1040 Schedule C, etc.)
    • General ledger or checkbook
    • Certificates of Insurance from subcontractors

    You will receive a Final Audit Report from the carrier.  If money is owed and you disagree you can file a dispute. The payment due date will be suspended until the dispute is settled.  

    Here's a chalkboard video that summarizes all this:

     

     

    To discuss your Workers Compensation coverage with a Gordon Atlantic Insurance professional, call us toll free at 1-800-649-3252.  Prefer to type versus talk?  Use the form at the top left of this blog for a return phone call or email.

    Geoff Gordon

    INSURANCE QUESTION?

    Tags: commercial, workers compensation, insurance, Business, insurance audit, audit

    Latest Posts

    Most Popular Posts

    Have a Question?