How to Avoid Costly Mistakes on Your Workers Comp Audit

Don’t make these costly mistakes with your workers comp coverage.

When you operate a business, it’s normal to have your coverage audited from time to time.  However, should a routine audit uncover issues or inconsistencies with your employee codes or payroll, then you might be in for an expensive rate increase.  To ensure this doesn’t happen to you, here are some of the steps that you should take.

  • Prevent Code Misclassification

During an audit, many business owners discover that they have been underpaying (or in some cases, overpaying) on their insurance premiums.  Generally, employee code misclassification is at the root of this issue.  Code classifications play a major role in how a business’s workers compensation insurance premiums are calculated.  Unfortunately, with 700 codes to choose from, many business owners struggle to apply the right codes to coincide with their business and their employees’ functions.

  • Avoid Inconsistent Payroll Reporting

Workers compensation premiums are also based on a business’s payroll information.  However, when a business fails to report payroll information to their insurer, issues can arise.  Sometimes inconsistent reporting conceals the hiring or release of employees.  When payroll information is inaccurate or not up-to-date, it makes it impossible for insurers to gauge a business’s true risk and adjust its coverage and premiums accordingly.  If an auditor discovers payroll inconsistencies, then this can result in major workers compensation insurance rate adjustments.

These are some of the steps that you should take to ensure that a workers compensation audit does not result in higher rates.    Want further help with your commercial coverage?  Make sure you have the right business insurance protection at the best price by giving our knowledgeable Total Protection Team a call at 951-600-5751, sending an email to, or stopping by our Murrieta, California office today.  We are always happy to help!