An insurance audit is when an insurance company verifies reported payroll or revenues of a policyholder to ensure that the policy reflects accurate rating information. Audits are common with all workers compensation policies, most general liability policies, and occasionally on marine or property policies. For “premises liability” the area – for example, the square footage of a retail store – may be the metric, but that doesn’t need to be audited as it doesn’t change. These different rating metrics should be the best measure of the “exposure,” and if it changes from year to year an audit guarantees the accuracy.
