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Your business’ actual workers’ compensation premium is determined from the yearly workers’ compensation audit conducted by the insurance company. This premium can change drastically from the estimated premium used for your original policy.

To streamline the process, assign one person as the sole contact for the auditor. This can avoid miscommunication. Select someone that is intimately familiar with all departments and workers, as well as the payroll records.

Have info about the specific job duties performed by a certain department or by individual employees handy.

Try to expect all questions to gain an advantage and make sure that you can offer correct details to the auditor. You don’t want the auditor to make any assumptions because he will always select the workers’ compensation codes that will definitely be more favorable to the workers’ compensation insurer.

Request the records for the previous year’s audit for the contact person to review with your prior years audit billing statements. This can jog their memory from the prior audit or show him the sorts of information the auditor is hunting for). Either way, it is a good preparation tool, kind of like preparing for a test.

Make sure that your payroll documents obviously specify which hours were paid as overtime so that he does not mistake that pay with straight hourly wages. If your company uses subcontractors or independent contractors, make sure you have explanation that they have their own workers’ compensation insurance. Without that paperwork, your premiums will likely go up, as you could be liable for their risk exposure.

If you use a employment agency, those workers are the responsibility of the agency and is going to be covered by the agency’s workers’ compensation policy. Make sure your records and make sure to differentiate between workers, contracted temp workers, and independent contractors.

If you’re in the construction industry, or similar, don’t forget that you may use multiple workers’ compensation class codes and assign one worker multiple job codes. Documentation must show the particular hours workers spent in each one of the different workplace exposures. If you don’t then, every worker will be put into the highest classification code possible.

The bottom line is you need to understand how the insurance carriers operate. Their ultimate goal is to raise your rates to as high as feasibly possible. Another thing you need to understand is that they frequently make mistakes and you have to be on the look out for them.

If you are not completely prepared or you are not familar with the workers comp system, seek out the advice of a specialist or start reading up on your workers’ compensation knowledge. It could mean the difference between saving and spending a lot of money.

It’s a lot to remember. You should think about hiring a private auditing company to help make preparations for your annual workers’ compensation audit.