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Annual premium audits
Every SFM policyholder undergoes a premium audit at the end of their policy period. Premium audits are our way of making sure that your premiums are fair and accurate.
Premiums are billed at the beginning of the policy period, based on an estimate calculated from your organization’s job classifications and expected payroll. Classifications describe the nature of your business and reflect the risk of injury.
The purpose of a premium audit
Payroll can change throughout the year, due to changes in workforce size, employees working overtime or operations expanding or diversifying.
At the end of each period, we audit the past policy period and classifications and adjust your premium to reflect any change, if necessary. If the final premium is less than the initial estimated amount, your organization will be reimbursed the difference. If the premium is greater, then you will be charged the additional premium.
Premium audits are our way of making sure that your premiums are fair and accurate.
Types of premium audits
There are different types of premium audits depending on the size and complexity of your organization.
- If your premium is less than $10,000, you will be asked to complete a premium audit online using My Payroll. You will receive a letter with a personal ID and password when the time comes for your audit to be completed.
- If your premium is more than $10,000, a field auditor will do an in-person audit at your location. You will receive a postcard in the mail with the time and date of the audit.
- In some rare cases, you will be able to complete a paper audit by mail. You will receive a letter with a paper audit and instructions on how to complete it. Once you have completed the form, mail it to our Premium Audit Team.
Preparing for your premium audit
Before your annual premium audit, be sure to have your records ready in advance and make sure they are accurate. Records you should have prepared include:
- Payroll register or journal for the dates your policy is in effect
- Quarterly tax reports
- Departmental labor reports (for larger employers)
If you work in construction, you should also include these records:
- Cash disbursements journal or business checkbook
- Workers’ compensation certificate of insurance for all subcontractors hired during policy period
- Evidence of contractor registration
- Form 1096 and attached 1099 statements for the most recent calendar year
Some outside payroll services are paperless, so be sure to print any needed tax reports and payroll registers from the payroll software program prior to the audit. Payroll service providers should be able to help if you have questions.
Be available for questions
The more you are able to communicate with your premium auditor, the more smoothly the process will go. Make sure you're available to answer any questions your auditor may have.
For more information, see our tips for a smooth premium audit.
Call our Premium Audit Team at (800) 937-1181 with any questions.