Because Workers’ Compensation premiums are based on the estimated exposures a policyholder is going to have throughout the year, an end-of-year audit is required to reconcile the estimated versus actual exposures. It is important for a policyholder to plan ahead and be prepared, as detailed recordkeeping is a very effective way to ensure your premium charge is as accurate as possible.
The New York Compensation Insurance Rating Board (NYCIRB) has established all class codes used by insurance carriers to categorize employees by job function. Each class code carries a different rate based on that job function’s overall Workers' Compensation (WC) claims experience and risk. Employers should review their policy class codes to ensure their employees are classified correctly and present the WC Auditor with all available information to support any classification reassignment request.
Remuneration (including payrolls) are used to determine your Workers’ Compensation policy Manual Premium. Most of an employee’s payroll can be used when determining premium, but there are instances when certain types of remuneration is excluded. It is important to understand these exclusions in order to report your information correctly to the WC auditor and to keep your premium charge as low as possible.
During the audit, the WC Auditor will want to review all of your 1099s from the expired policy period. Uninsured subcontractors can file WC claims against your policy if they are injured while performing work for you. Therefore, if there is not a Certificate of Insurance to match the 1099 for that policy period, there will be an additional WC premium charge. It is important to make sure you receive Certificates of WC Insurance from all of your vendors/contractors and be prepared to present these at the time of audit.
Because volunteer firefighters are not paid, their premium is determined by the total population they serve. It is important for the fire department to accurately record the population they cover, including any outside contracts, in order to report this information accurately to the auditor.
The premium for volunteer ambulance workers is determined by the number of “first response vehicles” owned and operated by the ambulance company during the policy period. Vehicles typically excluded from the premium charge include maintenance, parade or antique vehicles.
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If you have questions about preparing for an audit, or other questions pertaining to the audit process, please contact our office: