This page is for franchise owners whose policy is audited, which includes most workers compensation and many general liability policies. It explains what an audit is, what to have ready and how to avoid a large bill at the end.

What an audit is

An audited policy is priced on an estimate of your payroll, revenue or subcontractor costs. After the policy year ends, the insurance company checks your actual numbers and adjusts the premium. If your numbers came in higher, you owe the difference. If lower, you may get money back. The audit is a condition of the policy, so you can't skip it, and ignoring the auditor's requests can lead the carrier to bill an estimated amount or cancel future coverage.

An audit can be a form you fill in, a phone call, or a visit.

What the auditor asks for

• Payroll records and tax filings, such as your quarterly 941s
• Your profit and loss statement or gross sales
• A list of subcontractors you paid, what you paid each one, and their certificates of insurance
• What each employee does, so payroll is in the right job class

How to keep it small

1. Estimate realistically. See How to estimate your revenue and payroll.
2. Tell us when you grow. If your numbers rise by about 15% or more mid-year, we update the policy so the difference doesn't land all at once.
3. Collect every subcontractor's certificate before they start. Without one, the carrier can count what you paid them as your own payroll. See Subcontractor COI Monitoring.
4. Keep job duties clear. Office staff and field staff are rated differently. Make sure your records show who does what.
5. Consider pay-as-you-go workers comp. Premium follows each payroll run, so there is little to correct. See Pay-as-you-go workers comp.

If the audit looks wrong

Email the audit result to support@rikor.io with your records. Carriers do make mistakes: estimated audits when you didn't respond, subcontractors counted as payroll when you had their certificates, or employees in the wrong class. We check it and, where it's wrong, ask the carrier to revise it.

Related: Billing surprises and how to avoid them · How your renewal works