The income tax period regularly conveys ‘audits’ to everyone’s mind. That makes many individuals think about insurance policy audits as well. The good news is that IRS audits won’t usually be too painful. But if the time comes and you must prepare, the procedure will be a nuisance. The fundamentals of understanding what you should expect during your next insurance audit are thus covered in this post.
Innova Investments, LLC offers insurance Audit Services in Bluffton, SC. We can find any holes in your company’s policy that could be costing you money with the help of our knowledgeable team and cutting-edge technologies! So get in touch with us immediately for all your insurance auditing requirements!
Everything You Need To Know About Insurance Audit Services
What is an Insurance Audit?
An insurance audit is a checkup done by insurance firms to ensure your policy satisfies your requirements for business risk exposure. After each policy term, ensure that the policy reflects appropriate rating metrics and that your company’s yearly revenue and payroll are recorded correctly. Additionally, it confirms that you are paying the correct premium sum. The most typical insurance audits examine worker’s compensation, general liability, and comparable commercial company insurance plans.
Why Do I Need an Insurance Audit?
Your insurance provider bases your premium on your company’s actions from the previous year, so your premium at the start of the term is more of an estimate than a fixed price. You could owe your insurance provider extra money following an audit because your premium will probably have changed from what you initially paid. Still, you might also be eligible for a refund.
It ensures that your company is adequately safeguarded against risks and dangers. An audit may assist in verifying that the insurance coverage for your company is enough because underinsurance might result in unforeseen expenditures down the road. Insurance audit firms will conduct audits to ensure the data they possess about a company is accurate; otherwise, they risk failing to comply with state legislation.
It can be advantageous for you to contact your provider to renegotiate your policy if your company has seen significant changes throughout your coverage, such as significant increases in sales or changes in the number of personnel on your payroll.
What Should I Expect from an Insurance Audit?
The insurance provider establishes the premium you pay each time you buy a new business insurance policy or renew an existing one based on your anticipated annual gross sales or payroll. Once the first policy period has ended, the insurance company will have a year’s worth of data to review and refer to, which will need slightly less estimating for the following year.
Your insurance agent will be able to price your commercial insurance plan more precisely by using the information from your audit. This annual insurance audit procedure enables your policy to develop and alter to your company’s needs.
A sum owed or credit will be in your report after your audit. If you have a balance owing, it indicates you underpaid your annual payments and must pay the additional amount to your insurance provider. You can pass your insurance audit if you only pay the remaining debt. If you receive a credit, it implies you overpaid for the year’s premiums, and the carrier will either credit you for the excess or return it to you. It’s crucial to follow the recommendations of your yearly insurance audit, especially if you want to prevent paying unwarranted noncompliance fines that can amount to 300% of the policy’s anticipated premium.
How Can I Prepare for an Insurance Audit?
It would help if you started gathering all the essential financial statements as your policy’s expiration date approaches to complete the audit. Choosing the point(s) of contact for the auditor is also beneficial. It should be a person or people familiar with the company’s day-to-day activities and can find any necessary files. You should keep thorough records of every aspect of your company’s activities, including:
- Payroll records
- Reports from QuickBooks
- Income and expense reports
- Certificates of insurance for subcontractors
- W2 forms
Frequently Asked Questions
Who Performs Insurance Audits?
Specialized auditors employed by the insurance business or hired through outside audit companies often carry out insurance audits. These auditors are skilled in assessing information about insurance and ensuring adherence to insurance rules and procedures.
How Long Does an Insurance Audit Process Take?
The intricacy of the policyholder’s operations and the volume of data to be examined might affect the length of an insurance audit. From a few weeks to many months is possible. Information is gathered, data is analyzed, on-site inspections may be required, and inconsistencies are reconciled during the audit process.
Are Insurance Audits Mandatory?
Insurance audits are for policyholders whose policies depend on moving targets like payroll or sales. These audits ensure the premiums represent the risk the policyholder is exposed to. If audit requests are not complied with, fines or coverage termination may result.
What Happens After an Insurance Audit?
The auditor will contrast the data audited with the information the policyholder submitted when the audit is complete. The auditor will typically contact the policyholder if inconsistencies are discovered to discuss them and ask for clarifications or more paperwork. Based on the audit results, the premiums may need to be adjusted.
The Best Insurance Audit Services in Bluffton, SC
Although doing an insurance audit will involve some work, ensuring that your company has the right level of protection is essential.
Innova Investments, LLC offers insurance audit services in Bluffton, SC. Our insurance audit services in Bluffton, SC, are propelled by an exceptional customer experience, efficient technology, a solid dedication to thoroughness, and robust quality control. Please make an appointment with us to get a free quote on an insurance audit or other financial services!