Premium audits can be a headache for charter schools. They can be time-consuming, stressful, and, if you’re not careful, result in additional premiums owed to the insurance company. Over the next three blog posts, we will talk about premium audits, how they are done, what records you need, how you can save money, and the most common questions surrounding premium audits.

What Is A Premium Audit?

Premium audits for charter schools are typically performed on commercial insurance policies providing worker’s compensation or general liability coverage.

When these policies are issued, you are asked to pay an estimated or “advance premium.” Advance premiums are based on your estimated exposures. (For charter schools, this is usually estimated payroll, revenue, and the number of students attending.)

Once your insurance policy expires, the insurance carrier will conduct an audit to determine the actual exposure and calculate the final earned premium. Premium adjustments are then determined by comparing audited exposures and operations with those you estimated initially.

What Records Do You Need for an Audit?

Records are essential to the audit process, and they provide and verify information, save time and minimize your insurance costs. The field auditor will let you know which of the following records will be needed for your audit when the audit appointment is made.

1.    PAYROLL RECORDS – includes payroll journal and summary, federal tax reports (941’s), state unemployment reports, and individual earnings records. Totals should be kept for overtime when applicable.

2.    SALES JOURNAL – includes all goods or products sold, rented, and distributed and service, repair, and installation.

3.    CASH DISBURSEMENTS – shows subcontractors, materials, and casual labor.

4.    CERTIFICATES OF INSURANCE – for subcontractors used during the policy period, showing General Liability insurance in all cases and Worker’s Compensation Insurance coverage if the subcontractor has employees.

We will provide you with tips and tricks for saving money on your audit in the next blog post.