At Nationwide, we see conducting a premium audit as a necessary step in keeping your business’ insurance at the right level. When a new policy or renewal is originally set up, the premium paid is based on an estimated amount of exposure, such as payroll or gross sales. After the first policy period has expired, we can more accurately price based on actual exposure for the policy period. This is especially important for insurance needs that change throughout the year.
Complying with the audit is important to avoid any unnecessary noncompliance charges. Please reference BR9955 or ST7115 in your new business or renewal packet for more detailed information. See FAQ for additional questions.
Who will conduct the audit?
Within 20 days of the policy expiration date, you will receive an audit notice detailing how you will be audited and further instructions on how to complete the audit, including who will be contacting you and who to contact with additional questions. The audit will be done by one of the following methods:
- Mailing a premium audit form called business activity questionnaire and/or notification to you; and
- A premium auditor representing our company will call you for a telephone audit of your records; or
- A premium auditor representing our company will visit you for a physical audit of your records.
- Mailing a premium audit form called business activity questionnaire and/or notification to you to be completed online.
This process is important to your business - and much easier than you think
Premium audit FAQs
When we mail out the premium audit form, we ask for the appropriate information needed depending on the exposure on your policy: payroll, sales-based, or other. Common financial documents requested are payroll records, 941s, W2 forms, Quick books reports, unemployment reports, profit and loss statements for the audit period. We may also request an annual 943 (applicable for Farm/Agricultural operations), as well as 941s and/or state unemployment reports for the most recent four quarters corresponding to the audit period. Please do not include any social security numbers. Submitting your report without such verification will require us to issue an audit on a non-productive basis. Premium cannot be returned without verification.
If your business used subcontractors, we will ask for the subcontractors’ certificates of insurance and the total cost for all work performed by anyone other than direct employees during your policy period (this includes 1099 laborers, independent contractors, casual laborers, subcontractors, etc.). We will request costs separated by labor and material/equipment furnished. Please note that breakdowns by percentages will not be accepted. You will need to provide proof of coverage comparable to your policy’s line of business (General Liability and / or Workers Compensation). The date of coverage must cover the period of time work was performed during your policy period. Coverage limits will also be reviewed to determine adequate coverage. Adequate insurance means the subcontractor carries liability coverage and limits of no less than $1,000,000 each occurrence/$2,000,000 general aggregate/$2,000,000 products-completed operations aggregate for the period of time the work was performed for you. Any limits less than the above will be considered inadequate and payroll charge will be included on your audit.
Most state Workers Compensation laws will hold you responsible for injuries sustained by an employee of an uninsured subcontractor. You may also be responsible for the legal liability of your subcontractors. To protect yourself, be sure to secure a Workers Compensation Certificate of Insurance from all subcontractors prior to the subcontractor beginning any work on behalf of your business. If no evidence of insurance is available, the subcontractor’s payroll may be added to your premium base as payroll. Depending on state law, if a person is claimed to be a subcontractor, but they do not have their own employees and their duties closely resemble those of an employee of yours, that person may be considered an employee for audit purposes.
Payroll: Many of the premiums for your insurance are based on payroll which is defined as total remuneration. Remuneration includes: Wages, Commissions, Bonuses, Overtime Pay, Holiday Pay, Vacation Pay, Sick Pay and Payment for Piece Work
Overtime: The amount paid in excess of straight time can be deducted if the excess can be verified by your records. Your records must show overtime separately by employee and totaled monthly and quarterly. This is not applicable in PA (WC) and DE (WC)
Division of Payroll: Division of an individual employee’s payroll to more than one classification is not allowed. Exception: For construction or erection operations, the payroll of an employee may be allocated to each type of work performed if proper records are kept. Payroll cannot be divided between construction of office or sales classifications. Please note that classification breakdowns by percentages will not be accepted.
Gross Sales: Sales information must be kept separately for each location with monthly and quarterly totals by the type of product sold. Please note that classification breakdowns by percentages will not be accepted.
On the audit form we will give the appropriate contact information to mail, email, or fax back the audit information. If completing the audit via the enclosed forms, please use black ink
Mail: Premium Audit
PO Box 182069
Columbus, OH 43218-2069
Who should I contact if I have questions about my audit or would like to know the status of my audit?
You can start with our audit department at 1-800-243-2890 or Email: AuSuMPAM@nationwide.com
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- When providing audit information or documentation, please do not include any Non-Public Information or Personal Protected Information such as: Social Security Numbers, Taxpayer Identification Numbers, PIN, banking or credit card information, etc. This information should be redacted prior to submitting audit documentation.
- If completing the information online via the website above for multiples Lines of Business, please check the “Forms” drop-down to ensure that all applicable forms were completed prior to submitting.
Common terms & definitions for premium audits
We've compiled a list of terms and definitions to help you make sense of some of the premium audit terms on our website.
Keep in mind that our terms and definitions are intended for information purposes only, and the way they're interpreted or applied may vary from state to state.
The policy period for which you will provide the information for the premium audit.
Work that is not typically in the scope of your normal business operations and does not advance your business. Usually performed on an irregular or one-time basis.
Refers to work done by independently employed workers who have a contract with your business for a limited period of time, use their own equipment and pay taxes on their own.
Certificate of Insurance: a document from an insurance company that a subcontractor uses to prove to your business the existence of his own insurance coverage for a set period of time.
Detailed overview of your business and how it operates, including the industry and type of clients served, the product and/or service offered, and how the product and/or service is delivered.
Employers who withhold income, Social Security or Medicare tax from employees’ paychecks or who pay the employer’s share of Social Security or Medicare tax file these forms with the IRS to report these taxes.
The amount paid for hours worked above the employees’ regular 40-hour workweek.
The total amount charged by your business and any other entity operating under your business’s name for all products sold or distributed, all services performed, all dues or fees collected and/or all properties rented, excluding any taxes.
Total compensation paid to employees prior to any deductions. Includes wages or salaries, commissions, paid time off, bonuses, overtime and stipends.
The total gross payroll for all employees and officers/owners as reported on the tax forms during the policy period.
The legal structure of your business (corporation, individual, partnership, LLC, LLP, nonprofit and such).
Products underwritten by Nationwide Mutual Insurance Company and Affiliated Companies. Home Office: Columbus, OH 43215. Subject to underwriting guidelines, review and approval.
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