Work Comp Insurance Audit
A workers' compensation insurance audit is a review of your business records conducted by your insurance carrier to verify the payroll figures and employee class codes used to calculate your premium. Most businesses are misclassified — and overpaying — without ever realizing it. An independent audit can identify those errors and recover the difference.
What Is a Workers' Comp Insurance Audit?
Workers' compensation insurance premiums are calculated based on two key factors: your total payroll and the class codes assigned to each employee's job duties. Class codes reflect the level of risk associated with a particular type of work — and they directly determine how much you pay.
At the end of each policy year, your insurance carrier conducts an audit to reconcile the estimated payroll used to set your initial premium against your actual payroll. If your actual payroll was lower, you may be owed a refund. But if your employees were assigned the wrong class codes — a very common error — you may have been overpaying for years.
An independent work comp audit, conducted on your behalf, reviews both your payroll records and your class code assignments to identify overcharges and recover excess premiums paid.
How Carrier Audits Work
Mail Audit
The carrier sends a form requesting payroll records, which you complete and return. This is the most common format for smaller businesses.
Phone Audit
An auditor contacts you by phone to review payroll data and answer questions about your operations and employee duties.
In-Person Audit
An auditor visits your business to review records directly. Typically used for larger accounts or businesses with complex operations.
Common Errors That Lead to Overpayment
Insurance carriers and their auditors make mistakes. The most frequent errors that cause businesses to overpay include:
Incorrect Class Codes
Employees assigned to higher-risk class codes than their actual job duties warrant — the single most common and costly error.
Misclassified Subcontractors
Payments to subcontractors who carry their own coverage included in your payroll base, inflating your premium.
Overtime Included in Payroll
In many states, overtime premium pay (the extra 50%) should be excluded from the payroll base — but carriers often include it.
Officer Payroll Errors
Corporate officers are subject to minimum and maximum payroll caps that are frequently applied incorrectly.
Excluded Employees Counted
Certain employees — such as sole proprietors, partners, or family members — may be exempt from coverage but still included in the audit.
Payroll Allocation Errors
Employees who perform multiple duties across different class codes must have their payroll split accordingly — a step often skipped.
Our Independent Audit Process
Records Review
We collect your current and prior-year policy documents, payroll records, certificates of insurance from subcontractors, and carrier audit worksheets.
Class Code Analysis
We review every employee's job duties against the class codes assigned by your carrier and identify any misclassifications.
Payroll Verification
We verify that your payroll base was calculated correctly — including proper exclusions for overtime, subcontractors, and exempt individuals.
Discrepancy Report
We prepare a detailed report of every error found, quantifying the premium overcharge for each item.
Carrier Dispute & Recovery
We present our findings to your carrier and negotiate a premium adjustment or refund on your behalf.
Why Work With Chambers & Company?
- We conduct a no-cost preliminary review to determine if an overcharge exists before any engagement.
- We work on a contingency basis — our fee is a percentage of the savings we recover for you.
- We can review multiple prior policy years to recover historical overcharges.
- We handle all communication with your carrier — you don't have to navigate the process alone.
- Corrected class codes reduce your premium going forward, delivering ongoing annual savings.