What is an Insurance Audit?
An insurance audit, in the realm of commercial insurance, refers to a process conducted by an insurance company to verify the accuracy and adequacy of the information provided by a policyholder regarding their business operations, exposures, and insurance coverage. The purpose of an insurance audit is to ensure that the premium charged aligns with the actual risk exposure of the business.
Insurance Audit in More Detail
During an insurance audit, the insurance company may request supporting documentation such as payroll records, sales figures, or certificates of insurance. This information is used to assess the appropriate premium for the policy period and to determine if any adjustments or modifications to the policy are necessary.
Insurance audits are a standard practice in commercial insurance to maintain fairness and accuracy in premium calculations. They help ensure that businesses pay premiums commensurate with their risk profile and prevent underpayment or overpayment of premiums.
Engaging in an insurance audit demonstrates a policyholder’s commitment to transparency and compliance with the terms of their insurance policy. By providing accurate and up-to-date information during an insurance audit, businesses can maintain a strong relationship with their insurance provider and ensure the appropriate coverage and pricing for their insurance needs.
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