Premium audit
A review after a commercial policy period to align premium with actual payroll, sales, or exposure.
Plain definition
A premium audit compares estimated exposures at policy inception—payroll, sales, subcontractor costs—to actual figures during the term. Workers’ compensation and general liability policies commonly use audits to finalize premium. Audits may be mail, phone, or physical depending on carrier and size.
Why it matters
Underestimating payroll at bind can produce a large audit bill later. Overestimating may yield a return premium, but only after documentation.
Example
You estimated $200,000 in annual payroll for a GL policy but ended at $320,000 after hiring. The audit increases premium proportionally and may apply minimum premiums.
Common misunderstanding
An audit is not a fraud investigation by default—it is a contractual true-up—but misclassification of employees or uninsured subcontractors can create penalties.
Policy language always controls. This is educational content, not advice. See our disclaimer.