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Why Did My Workers Comp Audit Increase My Premium?

Audit increases happen for three reasons — and understanding which one hit you determines what you can do about it.

• ✓Payroll exceeded the estimate you made at policy inception
• ✓Workers were reclassified to higher-rated codes by the auditor
• ✓Subcontractors without certificates were added to your payroll
• ✓All three are disputable with the right documentation

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The Three Causes of Audit Premium Increases

Payroll underestimate: If your actual payroll for the year exceeded the estimate you gave at inception, the carrier charges additional premium for the exposure they didn’t collect on. This is the most common audit finding and is usually not disputable — the payroll records are what they are. The solution is better estimation at inception, or pay-as-you-go billing.

Class code reclassification: If the auditor determined that some workers were performing higher-risk work than their assigned code reflected, they reclassify those workers and charge the higher rate for the relevant payroll. This is disputable if you have documentation showing the work performed matched the original code.

Uninsured subcontractors: If you paid subs who couldn’t provide workers comp certificates, the carrier added their labor to your payroll at the applicable class code rate. This is preventable going forward through certificate collection — and potentially disputable if the subs actually had coverage and you can locate the certificates.

How to Dispute an Audit Increase

File a written dispute with your carrier’s audit department within 30 days of receiving the audit bill. Include specific objections — ‘Employee X was performing code 5445 work, not 5551 work, as shown by attached job descriptions and contracts’ — and supporting documentation.

For uninsured sub charges, locate any certificates you may have collected and submit them. If the sub had coverage and you have the certificate, the charge should be reversed. If you can’t locate certificates, contact the sub’s insurance agent directly and request a backdated certificate showing the coverage was in force.

For payroll discrepancies, verify the auditor used the correct payroll records. Payroll services sometimes provide consolidated summaries that don’t break out different employee categories — an auditor may assign all payroll to the highest-rated code by default.

You Might Also Find Helpful

• Workers Comp Audits — What to Expect
• Workers Comp Class Codes for Contractors
• Pay-As-You-Go Workers Comp
• Subcontractor Workers Comp Requirements

We Help Contractors Dispute Unfair Audit Charges

If your audit increase doesn’t look right, we review the worksheet and advocate with the carrier on your behalf — at no charge.