Workers' Compensation Earthquake Surety Bonds Explorer Auto
ICW Group provides Workers' Compensation, Earthquake, Surety, and Auto insurance.

Premium Audit Glossary of Terms

We hope you find these terms helpful!

A careful examination of your company's operations, payroll records and books. The audit is performed to determine the actual insurance exposures for the workers' compensation coverage provided and is concluded with a report of the findings.

Average Weekly Wage
A calculation that reflects the average rate of remuneration of employees, used as a basis for determining benefits in workers compensation insurance.

Basic Classification
The basic classification that describes your company's primary business and is not part of the standard exception classifications. The basic classification is often referred to as the "governing classification", when additional classifications are also applicable. Example: A construction classification would be Carpentry.

Certificate of Insurance
A short-form documentation of an insurance policy. This form can also be called a COI.

Check Audit
This is a audit performed for an interim period (usually by mail, but may be a physical visit), conducted to compare with the original policy estimates. If needed, appropriate adjustments are made to the premium.

Classification Code
Also called Class Code. The workers' compensation classification code is based on the operations of your business and the corresponding risk associated with the workplace exposure. Each class code has a premium rate associated with it. For example, the classification code for an office clerk should carry a significantly lower rate than the code for a roofer.

Deposit Premium
This is the initial premium that was calculated when your policy was issued. This is your first payment for that policy period. Other payments will be based on the type of payment plan that has been selected.

Earned Premium
This is the premium that is calculated on your final audit statement.

Estimated Premium
This is the amount of premium you would be required to pay based on certain estimated exposures at the time your policy was issued. This premium may be subject to a premium audit and therefore may be adjusted based on the audit results.

Field Audit
Physical audit performed on-site at your company. See Physical Audit.

Final Audit
Performed shortly after the end of your policy, it takes into account your full policy period operations and exposure. This audit is processed based on your payroll records and can be conducted over mail, phone, or as a physical audit.

Governing Classification
The classification code that generates the most payroll, other than a standard exception classification (unless there is no other workplace classification applicable other than a standard exception).

Interim Audit
Monthly, quarterly, or semi-annual audit billings. These are most often-processed using mailed reports, but can also be processed using physical audit information.

Payroll includes wages paid to your employees and contractors, as well as: commissions, bonuses, overtime pay, pay for holidays, vacations and sickness, payment for piece work, value of meals and lodging and other substitutes for money. State exceptions may apply. Payroll may also be referred to as "remuneration".

Payroll Audit
This is another term for a Workers’ Compensation audit. The exposure for your policy was based on estimated payroll originally. Payroll audits may be conducted via mail, phone, or physical audit, to determine the actual payroll applicable to the audit period. Allocation between class codes is important and is based on actual time cards when applicable (construction operations), and comes from your actual payroll records. An estimated or percentage allocation of payroll is not allowed.

Physical Audit
Also referred to as Field Audits, during a physical audit, our auditor visits your company, reviews your records, and compiles exposures by classification. This information is most often used to calculate the final audit; however, it can be used to help verify your original estimates. In addition, Service Audits are available.

Policy Inception
The actual date your policy went into effect and insurance coverage is provided.

Policy Term
The dates that your policy is in effect, from inception to expiration. This is shown on the declaration page and is usually 1-year.

Service Audit
A Service Audit is requested by Underwriting. Like a Physical Audit, our auditor visits your business and reviews your operations as well as a sampling of your payroll reporting systems. The proper classifications are then determined and reporting procedures will be discussed.

Standard Exceptions
Standard Exception employees in California are Clerical Office (8810) and Salespersons – outside (8742). There are specific rules associated with these exception classifications (ie: no division of payroll, physical separation,etc). In most other states, Standard Exception employees are Clerical Office, Salespersons-outside, and Drivers (7380). Please Contact us if you would like more information.

Subcontractors may also be referred to as "independent contractors." Workers compensation laws may hold you responsible for employees of an uninsured subcontractor, as though they were your employees, if there is no certificate showing evidence of insurance. State exceptions may apply. Subcontractors can easily obtain a Certificate of Insurance through their insurance agent, and it is important that you obtain a copy for your records.

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