What is an insurance premium audit?
A premium audit is a condition of most business insurance policies and helps insurers to confirm the actual exposure basis used in determine the liability premium.
For example, two manufacturers in the same community both make identical products. The first manufacturer has annual sales of $10,000,000 and the second manufacturer has annual sales of $100,000. The gauge of work output in this example is the sales that each manufacturer generates. The manufacturer who does $10,000,000 of sales is 10 times more likely than the smaller manufacturer to have a claim related to their product. It therefore stands to reason each of these manufacturers should pay a premium based upon the actual amount of work they produce.
When an insurance policy is written, certain assumptions are made in regards to their liability premiums such as how much work output they will generate over the course of the next 12 months. The way we calculate premiums exposures may include based upon sales, payroll, area, cost, etc. The premium audit process functions to determining what the actual work output was for a given business during the most recent policy term. This audit process may be conducted in several different ways, including phone verification of records, a physical audit consisting of examination of your books and records, or a report completed by the insured. To read more click Subject To Audit. Another helpful article is titled Seven Ways To Reduce Your Insurance Costs At Audit.
To read more click Subject To Audit. Another helpful article is titled Seven Ways To Reduce Your Insurance Costs At Audit.