Every employer must carry workers’ compensation insurance to make sure employee injuries are covered should they occur on the job. The premium of workers comp is based on the payroll paid to employees and is estimated at the beginning of your policy.
Your payroll has a tendency to fluctuate throughout the year. As you have changes in staff or compensation, the estimated payroll may differ by the end of your policy period. It is because of this fluctuation that you must comply with an annual work comp audit. At audit time you report the actual payroll paid that term. You are then either charged or credited for the difference in payroll.
If there are significant changes, specifically an increase in payroll, it will attribute to additional premium owed to the insurance company. To ease the burden of additional premium owed it is best to report large changes in payroll when they take place. Or, if there is a significant decrease in payroll, take advantage of your credit before the end of your policy term.
Keeping your payroll information accurate on your workers compensation policy will alleviate any surprises come audit time.
Please contact Professional Insurance Programs if you have questions or concerns regarding your Workers’ Compensation Insurance.