What auditors ask for
Review the requests that come up most often so you can gather records in a cleaner order.
Learn more →Workers' comp audit basics
What is a workers' comp audit? What to expect, step by step
Why the carrier audits you, what the auditor asks for, how long it takes, and what makes the bill go up.
Quick answer
A workers' comp audit, also called a premium audit, is your insurance carrier's check of what you actually paid in payroll during the policy period. Your premium was billed on estimated payroll when the policy started. After the policy ends, an auditor looks at your real payroll by job class, and the carrier then sends either a bill for additional premium or a refund.
It is routine, not a sign that something is wrong. Workers' comp policies are subject to audit, and the policy lets the carrier examine your records for the policy period, including for up to three years after it ends. Depending on the size of the account, the audit can be a form you fill in online or by mail, a phone or video review, or an auditor visiting your business.
The auditor mostly asks for payroll records, quarterly payroll tax reports, job duties, and proof of insurance for any subcontractors. What raises the bill is usually payroll above the estimate, subcontractors without a certificate of insurance, or work that belongs in a higher-rated class code.
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What to expect, step by step
The order is the same for most carriers. Your request letter sets the format, the records and the deadline.
| Step | What happens | What you do |
|---|---|---|
| 1. The policy period ends | The carrier starts the audit, often within a few weeks of the policy's end date. Some carriers send it to an outside audit firm. | Find the policy period dates and the payroll estimate on your declarations page. |
| 2. The request arrives | A letter, email or call names the audit format (online, mail, phone, video or in person), the records to provide, and a deadline. | Read the full list of records, note the deadline, and name one person to handle it. |
| 3. You gather records | Payroll for the policy period, 941s and state unemployment reports, job duties, subcontractor payments and certificates of insurance, and ledgers if asked. | Work through the checklist and map every total to the policy period, not the calendar year. |
| 4. The review | The auditor goes through payroll by employee, asks what each person actually does, and checks each subcontractor's proof of coverage. | Describe duties plainly and accurately. Write down anything the auditor says is still missing. |
| 5. Results and the bill | The carrier sends the audit results: payroll by class code and the final premium. You either owe additional premium or get a refund. | Check each line against your records before you pay. If something is wrong, ask the carrier in writing to correct it and attach the records that show why. |
What raises the audit bill
- Payroll grew beyond the estimate on the policy. The premium follows actual payroll, so more payroll means more premium.
- Subcontractors with no certificate of insurance for the dates of the work. The carrier can add what you paid them, or the labor share of it, to your payroll.
- Employees whose actual duties fall in a higher-rated class code than the one on the policy, such as office staff who also work in the field.
- Overtime reported as one total. The premium part of overtime can usually be excluded only when payroll shows it separately in dollars.
- Owners or officers covered by the policy whose pay was left out of the estimate.
- Not completing the audit. In states that use NCCI's rule, carriers can add an audit noncompliance charge of up to two times the estimated annual premium.
Documents the auditor usually asks for
- Payroll register or payroll summary for the policy period, by employee.
- Quarterly federal Form 941s and state unemployment wage reports.
- W-2 and W-3 summaries, plus 1099s for contractors.
- Job titles and a short description of what each employee does.
- A list of subcontractors with amounts paid and their certificates of insurance.
- General-ledger or cash disbursement records, when requested.
- Owner and officer names, titles, ownership share and pay.
Keep reading
Audit documents
See the main record groups and the supporting files that usually answer follow-up questions.
Learn more →General ledger records
See when ledger detail actually helps and how to keep it from overwhelming the packet.
Learn more →Phone vs. field audit
Prepare differently depending on how records will be retrieved, shared, and reviewed.
Learn more →Workers' Compensation Audit Checklist (Free PDF)
Lead-magnet landing page for the free checklist, with preview content, opt-in capture, and a soft upsell into the Construction Kit.
Learn more →Contractor audit prep
Use this when subcontractors, COIs, mixed duties, and owner/officer questions are part of the file.
Learn more →Frequently asked questions
What is a workers' comp audit?
It is the insurance carrier's review of your actual payroll, job classes and subcontractor costs after the policy period ends. The carrier compares them with the estimate your premium was based on and sends a bill for additional premium or a refund.
How long does a workers' comp audit take?
It depends on the format and on how ready your records are. A mail or online audit is a form you complete and return by the deadline in the request. A phone, video or field review is scheduled with the auditor. Most of the time goes into gathering records, so having them organized by policy period is what shortens it.
Why did my workers' comp premium go up after the audit?
Usually because actual payroll was higher than the estimate, a subcontractor had no certificate of insurance for the work, or some employees were placed in a higher-rated class code. The audit results show payroll by class code, so compare them line by line with your records.
Can a workers' comp audit lead to a refund?
Yes. If your actual payroll was lower than the estimate, the final premium can be lower than what you paid, and the carrier returns the difference. A minimum premium on the policy can limit how far it drops.
How far back can a workers' comp audit go?
The audit covers the policy period that just ended. Standard workers' comp policies let the carrier audit records during the policy period and within three years after it ends.
What happens if I do not complete the audit?
The carrier cannot confirm your payroll, so it may bill you on an estimate. In states that use NCCI's audit noncompliance rule, it can also add a charge of up to two times the estimated annual premium. Contact the auditor before the deadline if you need more time.
Can I disagree with the audit results?
Yes. Ask the carrier to review the specific line, in writing, with the records that support your change. If that does not resolve it, your state has a formal dispute process, which the carrier or your agent can point you to.
Important scope note
Practical prep guidance only.
This page explains how workers' comp premium audits generally work, based on standard policy terms and NCCI rules. It is not legal, tax or insurance advice. Your state and carrier may follow different rules, and your audit request letter is the final word on what to provide.
Get the records together before the request arrives
Start with the free checklist, check the likely bill with the estimator, or use the workbook to keep payroll reconciliation, subcontractor COIs and the packet index in one file.