Often shortened to ‘workers comp,’ the system of workers compensation that providesmedical care and protection of income to those employees who fall ill or injure themselves as a result of their job, is one that greatly benefits both employer and employee.
Offering protection to both employees and businesses, audits are carried out annually by the relevant insurance providers, to evaluate the policy and make sure that whatever premiums are being paid, are accurately reflecting the potential risk of illnesses and injuries in the workplace being incurred. Usually involving a comprehensive review of the businesses payroll records, the job descriptions of employees and any other information that might be relevant, it helps the insurer accurately determine payroll and how many employees are covered by the workers compensation policy.
Why is it so importantto accurately answer all questions in the audit?
As a business owner, no matter how many employees you have, you must take full responsibility for answering all of the questions asked in the audit, both accurately and in their entirety. Why? Because if you were to provide the insurer with any information that isn’t accurate (at least to the best of your knowledge), your insurance premiums could be underestimated, making your business a liability risk in terms of lawsuits and/or penalties.
Can your accountant or insurer broker handle the audit for you?
While it’s perfectly acceptable to seek help with a workers insurance audit from such professionals as an accountant or an insurance broker, you should never wholly rely on them to fulfil what is required of the audit. Ultimately, you will be held responsible for the information provided, and the best way of ensuring that it’s accurate, is to be involved in the audit and actively review all information before it is submitted.
The importance of understanding factors that impact your insurance premiums
As an employertaking an active role in the insurance audit, you get a better understanding of any risks that may be present in the workplace or within the company itself, that could be improved upon to reduce incidents affecting the health and safetyof employees. Once you’ve fully understood all of the factors that have an impact on your insurance premiums, you can begin taking steps to reduce those risks as best you can, and possibly even reduce the cost of your insurance premiums in the future.
Whose help should you seek with a workers comp audit?
While as mentioned, it is important for employers to play an active role in a workers compensation audit, it’s also important that they have the right expertise and tools at their disposal to be able to complete the audit accurately, and an accounting professional or insurance broker can help them achieve that with ease.
As an important process that can have significant implications for a business, both legal and financial, working with someone who is familiar with all relevant tax laws and regulations, can ensure that aworkers compensation audit goes smoothly, and could even result in lower insurance premiums.