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.
