Premium Audit

A check after the policy year to true up premium against actual payroll or sales, since those were estimated up front. You might owe more — or get money back.

A premium audit is the true-up that happens after a policy period on coverages priced from estimates — most commonly workers’ compensation and general liability, which are rated on payroll or sales you projected when the policy started. The auditor compares your actual figures to those estimates and adjusts the premium up or down.

If your business grew, you’ll likely owe additional premium; if it shrank, you may get money back. The audit can pull from payroll records, tax filings, and your books, and — this is the expensive part for contractors — the cost of any uninsured subcontractors is typically added to your payroll and charged at the trade’s rate. A missing certificate of insurance from a sub is one of the most common (and avoidable) audit surprises.

You can control the outcome: keep clean payroll records split correctly by class code, separate clerical and sales payroll where the rules allow, collect and file COIs from every subcontractor before they start, and respond to the audit promptly. Ignoring an audit request can lead the carrier to estimate against you and even non-renew the policy, so treat it as a routine, manageable part of carrying these coverages.

This is a friendly general explanation, not legal or policy language. Exact coverage depends on your policy, carrier, and state. 🤝

Written and reviewed by the We Insure Things team — licensed independent insurance agents. Last reviewed July 23, 2026. Questions? Ask a licensed agent.