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Commercial Premium Audit FAQs


  1. What is your fax number?
  2. My policy is now cancelled---do I still have to complete the audit?
  3. I received a 2nd request but have mailed the 1st; was my audit received?
  4. Why is owner payroll needed if owners are excluded?
  5. The audit form requests gross receipts. Do I have to attach individual receipts?
  6. My premium basis is not based on gross sales. Why do we need to provide gross sales/receipts/revenue information?
  7. What if payroll doesn't match the amounts on my 941s or state unemployment compensation report?
  8. Why do we need subcontractor/insurance carrier information?
  9. Why did I get a bill/refund after my audit was done?
  10. What is a premium audit?
  11. Why am I being audited?
  12. How are audits conducted?
  13. When is the audit conducted?
  14. What records are needed for the audit?
  15. How are audit results communicated?

  1. What is your fax number?

    Our fax # is 1-866-888-0730. This will send your audit directly to the premium auditing department.


  2. My policy is now cancelled---do I still have to complete the audit?

    The audit is for a period of time where your policy was active with COUNTRY. A requirement of having commercial insurance with COUNTRY is submitting to an audit. Even though you no longer have the policy, the audit is to complete the policy term when it was active.


  3. I received a 2nd request but have mailed the 1st; was my audit received?

    Often times 2nd requests are automatically mailed out while your 1st request is on its way to the home office and they cross in the mail. If you received the 2nd request within a week of mailing the 1st one out, that’s most likely the case. If you want to verify that we did receive it, please contact our Premium Auditing department a call at 888-421-8589 (toll-free).


  4. Why is owner payroll needed if owners are excluded?

    The audit form is standardized to gather information from a wide variety of businesses. In terms of owner’s payroll, information is requested primarily for those owners that are covered under workers compensation. However, the payroll information is also used to reconcile payroll totals between owners and employees and the amounts requested for payroll verification on the forms such as 941s or state unemployment. As part of each audit review, Workers Compensation exclusion endorsements are carefully reviewed to determine which owners are covered and will be charged and which owners are excluded and will not be charged. Information provided on the form is kept confidential.


  5. The audit form requests gross receipts. Do I have to attach individual receipts?

    No, individual receipts are not required; the total amount of gross receipts/sales/revenue should be indicated on the form.


  6. My premium basis is not based on gross sales. Why do we need to provide gross sales/receipts/revenue information?

    In addition to being a premium basis for some policies, gross sales are also utilized to determine eligibility within our various insurance programs. For example, for some policies the amount paid to subcontractors may not exceed a certain percentage of gross sales in order to remain eligible for that program. Therefore, regularly determining gross sales for risks is an underwriting process to make sure that risks qualify for the programs that they are insured under. Gross sales that are reported by you are kept confidential.


  7. What if payroll doesn't match the amounts on my 941s or state unemployment compensation report?

    We use 941s or state unemployment compensation reports to verify payroll. Some reasons for differences may include policy dates not matching the quarters or owners/officers excluded from the policy are included in the reports.


  8. Why do we need subcontractor/insurance carrier information?

    Subcontractors are used by a wide variety of risks for various purposes. Risks may hire subcontractors to install, service, or repair products the risk sells or manufactures. However, most subcontractors are hired by construction companies to complete a portion of a construction project that the hiring contractor is unable to complete. Subcontractors create a vicarious liability for the contractors who hire them. Vicarious liability arises when the subcontractors' actions results in a general liability claim that exposes the insurer to defense costs and possible judgments against the hiring contractor. Therefore, it is important for the contractor to ensure that the subcontractor provides a certificate of insurance indicating coverage limits equal to or greater than the contractor's limits while also naming the contractor as additional insured.

    Contractors in Illinois should also be aware of the Employee Classification Act (ECA).

    The purpose of the ECA External Link  is to:  

    • correctly classify workers as either employees or independent contractors and
    • prevent the classification of employees as independent contractors to avoid paying employment costs such as workers' compensation insurance.

    The ECA applies to any hiring contractor in virtually any construction-related business, whether a general contractor, "paper" contractor or subcontractor in an individual trade.

    Under the new law:

    A hired worker is presumed to be an employee unless the hiring contractor can show the individual is an independent contractor or an already-established business entity of their own. The law requires very specific criteria to qualify for exempted status.

    Penalties including fines and potential jail time may apply to the hiring contractors who misclassify workers.

    The state is increasing contractor monitoring and requiring several state agencies to share employer information, including the Department of Revenue and the Workers’ Compensation Commission. Clients have already reported receiving letters about workers from the Department of Labor.


  9. Why did I get a bill/refund after my audit was done?

    Auditable commercial policies are written on an estimated premium exposure basis. Premium audits are conducted after the policies expire to determine actual exposure bases (payroll, sales, etc.). Premium exposures can either be up compared to the policy estimate, resulting in additional premium due, or down compared to the policy estimate, resulting in a return premium credited to your account.


  10. What is a premium audit?

    A premium audit is an examination of a policyholder’s business operations and records to determine the actual exposures for the coverage provided. The premium audit is conducted after the expiration of the policy term or cancellation of the policy to determine the correct classifications and exposures for the policy.


  11. Why am I being audited?

    The primary purpose for conducting premium audits is to determine the correct premium for YOUR policy.  A bases of premium is utilized as a measure of your activity and exposure to loss during a policy period. Some common bases of premium are PAYROLL, GROSS SALES and TOTAL COST. At the beginning of a policy period the bases of premium is ESTIMATED. Once the policy period is completed, a premium audit is conducted to determine your ACTUAL bases of premium. The ACTUAL is then compared to the ESTIMATED and additional or return premium is determined.

    In addition to determining the correct premium, premium audits are done to meet regulatory requirements, deter & detect fraud, collect ratemaking data and to obtain additional information to determine if operations have changed. 


  12. How are audits conducted?

    Three methods are used to conduct premium audits:

    • Self audit – form & self-addressed envelope sent to insured.
    • Phone audit – worksheet mailed & followed up with phone call.
    • Physical audit – appointment set & audit conducted on premise. 

    The type of audit is based on a number of factors which can vary by type of business. 


  13. When is the audit conducted?

    Premium audits are conducted shortly after the expiration of a policy term.

    Premium audits are also conducted on policies that cancel before the policy term is over. If the policyholder requests cancellation, the policy is reviewed for audit shortly after the cancellation is processed.  If the policy is cancelled for non-payment of premium, the policy is reviewed for audit approximately 30 days after cancellation.


  14. What records are needed for the audit?
    • Individual payrolls records including gross wages, vacation/holiday pay, bonuses and commissions paid.
    • State and/or federal quarterly tax returns (941’s/UC3’s)
    • General ledger
    • Check register
    • Total cost (labor and materials) and certificates of insurance for all subcontractors hired
    • Other records may be requested based on your operations.

  15. How are audit results communicated?

    A Premium Audit Statement is sent for each policy premium audit resulting in additional or return premium.  If the premium audit results in no change, a Premium Audit Statement is NOT sent to the policyholder.

    Once the premium audit results are known for the expired policy term, the bases of premium for your current term is adjusted based on the audit results. This process in known as a Change Due to Audit and is communicated to the policyholder by a change endorsement to the current policy.

    Results of the premium audit will also be reflected in your next Commercial Insurance invoice. The invoice may include:

    • Current Installment
    • Audit Premium (in full)
    • Change Due to Audit (spread)

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