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Insurance glossary · Workers’ comp and audits

premium audit.

The short answer

A premium audit is the insurer’s check, after the policy year, of your actual payroll or sales. It can return money or send a bill if the estimate at the start was off.

Nick McClish, Managing Partner, Riza Risk (licensed insurance agency) · Updated October 1, 2026

Why do insurers audit workers’ comp and general liability?

Because the premium at the start of the year is based on estimates of your payroll or sales. The audit replaces the estimate with what actually happened, so you pay for the exposure you really had, no more and no less.

What happens during a premium audit?

An auditor reviews your payroll records, tax filings, sales figures and payments to subcontractors for the policy year, sometimes by mail or phone and sometimes in person. They check that payroll sits in the right class codes and that subs had their own insurance.

What records does an auditor ask for?

Usually payroll reports and quarterly tax filings, a general ledger or profit and loss statement, a list of subcontractors with what you paid them, and the certificates of insurance you collected from them. Overtime records help too, since many states don’t charge for the extra half of overtime pay.

Why did my audit come back with a bill?

Most often because payroll or sales grew past the estimate, a sub you paid didn’t have a certificate on file, or payroll landed in a higher-rated class than expected. The bill is the difference between the estimated premium and what the final numbers produce.

Can I get money back from an audit?

Yes. If your payroll or sales came in under the estimate, the audit produces a return premium, subject to any minimum premium on the policy.

What if I don’t respond to an audit?

The insurer can charge an estimated premium, often well above your real exposure, and may cancel or nonrenew the policy. An unpaid audit bill can also follow you to the next insurer and make comp harder to place.

Can I dispute audit results?

Yes. Start with the insurer, with records that support your numbers or classification. If that doesn’t resolve it, rating bureaus and state insurance departments have dispute processes for workers’ comp audits.

How do I avoid a surprise at audit?

Estimate payroll and sales realistically at the start, update the insurer if they change a lot mid-year, keep payroll records by type of work, and collect a current certificate from every sub before you pay them.

Do premium audits work differently by state?

Yes, for workers’ comp. Each state’s rating bureau sets audit rules, like how overtime is counted and how much uninsured sub payroll is charged, and some states set deadlines and dispute procedures. The notes below cover Riza’s licensed states in detail and every other state in a line.

in the states where Riza is licensed.

Riza is a licensed insurance agency in New York, Colorado, Texas, Florida, Massachusetts, Arizona, Nevada, North Carolina, New Jersey and Georgia. Notes below cite the law they come from. Detailed write-ups cover Arizona, Nevada, Texas, North Carolina and New York. One-line notes for other licensed states appear with them when this term has one.

every other state.

How it works everywhere else, with the rule each line comes from. Riza is not licensed in these states.

by trade.

  • General contractorsPayments to subs without certificates are the most common source of audit bills for GCs.
  • PlumbingShops that grow fast mid-year often see audit bills because the estimate at renewal was last year’s payroll.
  • HVACSeasonal swings in payroll make a realistic estimate, and a mid-year update, worth the effort.
  • ElectricalPayroll split between office, estimating and field work needs records that show the split, or it may all be rated as field work.
  • Landscaping and property vendorsSeasonal crews and 1099 helpers are where audits most often add premium.

where you’ll see it.

  • Audit noticeA letter or email from the insurer or its audit firm asking to schedule the audit or return a questionnaire.
  • Audit statementFinal payroll or sales by class code, and the additional or return premium.
  • Your policyAn estimated payroll or sales figure on the declarations and a condition saying the premium is subject to audit.

get ready before the auditor calls.

Riza checks your estimates at renewal, reminds you to update them when the business changes, and helps you gather payroll and subcontractor records before the audit. If the result looks wrong, we work the dispute with the insurer.

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Class codeExposure basisUninsured subcontractor charge

Coverage it touches: Workers’ comp · General liability