The policy was priced on a guess. The audit is where it gets real.

They can, and for plumbing shops this is the audit surprise that shows up most. Under the rating rules most states use, a subcontractor who cannot show a certificate of workers’ comp insurance for the period they worked is commonly treated as your employee, and their payroll, or a share of what you paid them, is added to your policy at the class code of the work they did. A sub with a certificate on file is excluded. What changes the answer is the certificate, dated inside your policy period, with the sub’s legal name matching the invoice. Collect it before the first day of work, not at audit time.

Payroll by employee and class for the policy period, quarterly federal and state wage filings so payroll can be reconciled, overtime shown separately from straight time, a list of every subcontractor with what they did and what you paid them, their certificates of insurance, and the owner and officer election on file. Some carriers add a short questionnaire about the work you do. What changes the answer is how the records are organized: payroll sorted by class code with overtime broken out is an afternoon; a year of lump sums is a week and usually a bill. The checklist on this page is the set to keep current.

Because the audit can only start once the policy year is over and the payroll for it exists. Carriers typically request records within a few months of expiration, review them, and issue the adjustment afterward, so the bill or refund lands well into the next policy year. A bill means the audited payroll came in above the estimate, payroll that could have been excluded was counted, or subcontractors without certificates were added. What changes the answer is the estimate you started with: update it mid term when the crew grows and the adjustment at the end is small in either direction.

The straight-time part of overtime counts everywhere. The premium part, the extra half in time and a half, is excluded in most states under the common rating rules, but only when your payroll records show it separately. If the records carry overtime as one lump sum, the whole amount is counted, because the auditor cannot split what the records do not. A few states and some policy forms treat it differently, so we read yours before the audit. What changes the answer is the payroll system: set it to report overtime premium on its own line and the exclusion takes care of itself.

That depends on an election made when the policy was written and on your state’s rules for your entity type. Sole proprietors and partners are commonly excluded unless they elect in; corporate officers are commonly included unless they elect out; where owners are included, many states set a fixed or capped payroll for them rather than actual draws. The election has to be on the policy before the year starts, because an auditor applies what the policy says, not what you intended. What changes the answer is your state and your entity type, so we confirm the election at bind and again when the structure changes.

Yes, and the disputes that succeed are the ones on paper. The usual grounds are payroll assigned to the wrong class code, a subcontractor charged despite a certificate that was on file, overtime premium counted because it was not broken out, or an owner included against the election. Send the records that show it: the payroll report by class, the certificate with its dates, the overtime detail. Carriers correct documented errors; they do not act on a phone call. What changes the answer is the record, so the audit package we send has every number sourced, and a dispute is a matter of pointing to the page.