What is a General Liability Audit?

“An audit?  Oh No!”

That’s our first reaction to the word, as we associate it with the painful experience of an IRS Audit.  Well, an insurance audit is not a “bad” thing, but a NORMAL thing.

When your Commercial General Liability, Liquor Liability, Workers Compensation or Errors & Omissions (E&O) rates are based on variables like sales, payroll, or units produced, which can fluctuate, we must estimate them at the beginning of your policy year. After the close of each year, the insurance company will contact you to verify that actual sales, payroll or units match what was estimated at the beginning.  Additional premiums resulting from an audit is a sign of a growing company. You sold or produced more than you estimated 12 months ago.  During times of economic downturn, an audit can also result in return premiums when actual sales, payroll or units produced are lower than what was previously estimated.



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Cameron A. Shandersky, CPCU
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