A recent article I read shared the story of a Restaurateur who had a great year, only to find out their Workers’ Compensation premium doubled at expiration due to an audit. It made me cringe! I partner with many restaurant owners and hope none of my clients experience the frustration this business owner suffered. When you have a profitable year, you should feel proud of that accomplishment and not blindsided by a large additional expense.
A Workers’ Compensation Policy is a contract between the Insurance Carrier and the Insured. It states the Insurance Carrier will pay for injury to employees in the scope of their work for the Insured. It also states that the Insured supplies payroll projections at policy inception and any adjustments are made at audit, once the policy expires. As an insurance broker, I have found one of the easiest ways to prevent clients from receiving a large audit is to touch base quarterly to discuss how their business is doing. This accomplishes two things:
1) It ensures that the policy payrolls are in-line with current business operations
2) It provides the opportunity to increase payrolls during the policy term, if necessary, so any additional premium may be dispersed over remaining installments.
A large, unexpected bill is never a good thing and most premium audits, unless disputed, are due upon receipt with payment in full. That is why I encourage my clients to keep payrolls and other exposures updated throughout their policy term.
If you’ve had a great year and expanded your operation, congratulations on your success! Just remember that talking to your insurance broker on a regular basis and updating exposures throughout the year will not only keep your insurance premiums consistent, but also help to avoid any surprises at policy expiration.