Glossary
Premium audit
A premium audit is the carrier's after-the-fact review of a policy whose premium was based on estimates, most commonly workers compensation and general liability rated on payroll or sales. After the policy period ends, the carrier checks the actual figures and adjusts the premium: an additional bill if exposures ran higher than estimated, a return premium if they ran lower.
How it works
At binding, the premium is provisional, built on the payroll or sales the insured estimated at intake. After expiration the carrier audits the actuals, by mail, phone, or a physical visit, using payroll records, tax filings, and subcontractor certificates. The result is the final audited premium, and the difference gets billed or returned.
Why agencies care
Audit bills surprise clients, and surprised clients call the agency. The classic trap is uninsured subcontractors: if the insured cannot produce certificates showing a sub carried its own coverage, the carrier can charge that sub's cost as if it were payroll. Misclassified payroll and low-balled estimates at inception cause the rest of the pain.
Unpaid audit balances follow the account. They can block a rewrite with the same carrier and end up in collections. Setting honest exposure estimates at intake, and collecting subcontractor certificates all year, is cheaper than fighting the audit later.
Common questions
Which policies get audited?
Policies rated on variable exposures. Workers comp is audited almost universally, and general liability rated on payroll or sales is commonly audited too. Fixed-exposure policies like personal auto are not.
Can a client dispute an audit?
Yes. Carriers have dispute procedures. The usual fixes are corrected payroll records, a class code review, and certificates proving subcontractors carried their own coverage.
Part of the Relay insurance operations glossary. Updated 2026-07-11. See how we source content.
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