Premium Audit Helpful Tips and Terms

A premium audit is a confidential examination of your operations, records, and books of account undertaken after the expiration or cancellation of your policy. Below are some key tips and terms to help you as you work with us through the audit process.

Helpful Tips

  • Maintain Detailed Records — Comprehensive records make the audit process easier and work to your advantage. Payroll records should indicate what types of jobs each employee completed during your policy term and how much was paid. For construction and erection operations, an employee’s pay may be allocated to more than one authorized classification if proper records are maintained. However, our auditors cannot divide an employee’s wages between more than one classifications using a ratio or percentage split.
  • Obtain Certificates of Insurance — Do you use subcontractors? Make sure you have their workers compensation and liability insurance certificates. These help prove that the subcontractor is an independent business. If evidence of insurance is not available, payments to subcontractors are included on the audit.
  • Deductions — Depending on state law, you may be able to deduct a portion of costs such as:
    • Overtime pay
    • Restaurant tips (voluntarily given by customer)
    • Dismissal or severance pay
    • Business-expense reimbursements
    • Sales taxes
    • Other deductions

Glossary of Frequently Used Terms

You may encounter the following terms while providing information to us for your premium audit.

​Admissions
​Total number of persons, other than working employees, admitted to an event whether by paid admissions, tickets, complimentary tickets, or passes.
​Cases
Total number of cases sold. A case of beverages is the equivalent of 12 bottles of 750ml capacity. A case of eggs is the number of cases processed.
​Certificate of insurance
Evidence that your subcontractor had insurance coverage in place for the period that the subcontractor performed work for you.
​Description of operations
Briefly describe your business operations. Include final product(s), process(es), types of customers, means of delivery, installation.
​Duties/job description
Briefly describe each employee’s daily duties (e.g. payroll clerk, carpenter, shop). To be considered clerical, an employee MUST be performing general office work at a workstation that is physically separated from the following: work or service areas, areas where inventory is located, areas where products are displayed for sale, or areas where customers bring products for payment.
​Employees
List each employee on your payroll and for whom you withhold taxes. Show casual, day labor, leased employees, and temporary labor separately in another question on the form.
​Federal 941
Employer quarterly federal tax report that most companies file with the federal government showing gross payroll paid to employees. If you do not file 941s, you may use your Form 1040 Schedule C Profit or Loss Form Business (pages 1 and 2), a profit and loss statement for the audit period, or another form of income tax return (Form 1120, Form 1120S, or Form 1065) or other similar state quarterly tax documents that show wages paid.
​Full time
Twenty hours or more per week; part time is fewer than 20 hours per week.
​Gallons
​Total number of gallons sold. For propane, if the number of gallons is unknown, estimate the number of gallons by dividing the total sales by the average price per gallon.
​Gross overtime
​Amount paid for hours worked for which there is an increase in the rate of pay. This amount should already be included in the gross payroll. If overtime is paid at any rate other than time and one-half, please note it on the form.
​Gross payroll
Amount paid to employees before any deductions such as employee savings, retirement, or cafeteria plans. Gross payroll includes wages or salaries; commissions; bonuses; overtime; and pay for holidays, vacations, or periods of sickness. It also includes the value of housing provided to employees. You may exclude the following items from gross payroll: gross overtime portion of wages (not applicable in Delaware, Nevada, Pennsylvania, and Utah), tips, and dismissal or severance earnings. The following state-specific exclusions also apply (these exclusions are applicable to workers compensation policies only):
  • California: Amounts withheld for section 125 cafeteria plans by the employees
  • Kansas: Earnings for vacation, holiday, and sick pay
  • Oregon: Vacation pay and unanticipated bonuses
  • South Dakota: Earnings for vacation, holiday, and sick pay
  • Tennessee: Unanticipated bonuses 
​Ownership
​List each owner, partner, officer, or member as shown in the operating agreement, corporate charter, or bylaws. Note if any are inactive. Provide duties and gross payroll for the policy period shown. We will make the appropriate adjustment in accordance with state payroll limitations.
​Rounds
Number of persons playing. A round is either public or private and nine holes or 18 holes as indicated by the class code on the form.
​Sales
​Amount charged by you, your concessionaires, or by others trading under your name for all goods or products sold or distributed, operations performed, and rentals. This includes foreign sales. Do not include sales taxes or excise taxes that are collected and submitted to a governmental division, credits for repossessed merchandise and products returned, allowances for damaged or spoiled goods, finance charges for items sold on installments, or freight charges if freight is charged as a separate item on your customer’s invoices.
  • Restaurants: Gross sales should reflect all food and beverages, including alcoholic beverages.
  • Property management fees: Include the amount received from the property owner for services rendered. Do not include rental fees collected on behalf of the property owner.
​Stop gap
Sum of the total gross payroll for all employees (including officers) as disclosed on the filed tax forms that most closely align with the policy term being audited.
​Student
Average daily attendance for day sessions only, not including summer sessions.
​Subcontractor cost
Total cost of all labor, materials, and equipment that are furnished, used, or delivered in order to execute your work.
​Weeks employed
Number of weeks each employee was employed during the policy period, including vacation and sick time. A partial week is considered a full week. Use the hire and termination dates for those employees who were not on the payroll during the entire policy period.

 

 


​Premium Audit Questions

For questions please contact our customer service team:

1-888-224-9246
Email
Online Request Form
Fax: 1-800-800-3723 

If your policy number is in the 15-character, alphanumeric format (e.g. WCC-123-456789-015):

1-800-231-3484
E-mail
Online Request Form
Fax:
1-603-422-0144 (Mail Forms)
1-603-334-0291 (Disputes)