Workers compensation coverage is initially priced on an estimated basis. The insured estimates payroll and sometimes class codes at the beginning of the policy. For the upcoming year on which the insurance carrier charges a premium using the prescribed rates. After the close of the policy year the insurance carrier desires to firm up the numbers to confirm collection of the actual premium earned for the actual exposure insured. This firming up known as the premium audit

The policy will normally read ” you will let us examine an audit all your records that relate to this policy. These records include ledgers, journal Ventures, contracts, tax reports, payroll and disbursement records and programs for storing and retrieving data. We may conduct beyond its during the regular business hours during the policy. And within 3 years after the policy. Ends. Information available to buy on it will be used to determine final premium. Insurance rates service organizations have the same rights we have under this provision.  “

Premium, with rare exceptions, is based on payroll, also known as and remuneration. Below are the common remuneration inclusions and exclusions:

REMUNERATION INCLUDED:

• Wages/ Salary
• Commissions- If on draw, and draw is greater than commissions earned- use the entire amount of the draw
• Bonuses, unless awarded for individual invention or discovery
• Overtime- One third of amount is subtracted from the total amount (one half if it is double time pay)
• Pay for holidays,vacations, or periods of sickness
• Pay for time not worked(ie paid for an 8 hour day when only 7 hours worked)
• Pay for travel time to or from work or specific job site;
• Employer payment of amounts otherwise required by law (ie  Statuatory insurance, Social Security, etc.)
• Contributions to a savings plan or vacation fund required under union contract]
• IRS qualified Salary Reduction Plan (ie 401k) (refers to the employees contribution and any qualified agreement between the employer and the employee to pay into a retirement plan in lieu of direct wages)
• Employee savings plans- Only the amount given by the employee , not the employers match , if any
• Contributions to an IRA made by the employee
• Payment on any basis other that time worked such as piece work, incentive plans for profit sharing plans;
• Payment or allowance for tools;
• Value of housing/Lodging
• Substitutes for money(merchandise certificates, store credit, etc)

Remuneration Excluded:

• Tips and other gratiuties (if the employer has to make up difference between hourly pay plus tips and the specified minimum wage, the additional funds are counted):
• Payments by employer to Group Insurance or Pension Plans (employer matching)
• Special rewards for individual invention or discovery; and
• Severence pay