Insurance Audit Process for Motor Carriers

What Is an Insurance Audit?

An insurance audit is a review conducted by or on behalf of your insurance company to verify that the premium you paid during the policy period was based on accurate information. Most commercial trucking insurance policies are "auditable," meaning the initial premium is an estimate based on projected exposures (such as number of vehicles, miles driven, or payroll). After the policy period ends, the insurer audits your actual exposures and adjusts the premium accordingly.

Audits are standard practice in the insurance industry and are not a sign that your insurer suspects problems. They are simply a mechanism to ensure premiums match actual risk.

What Gets Audited

The specific items reviewed during an audit depend on the type of coverage:

Auto Liability and Physical Damage

• Vehicle count: How many power units and trailers were operated during the policy period
• Vehicle additions and deletions: Vehicles added or removed during the year
• Vehicle values: For physical damage, the current value of each unit
• Radius of operation: Changes in operating areas that affect risk classification

Workers Compensation

• Payroll records: Total wages paid to employees by job classification
• Subcontractor payments: Amounts paid to subcontractors who did not provide their own certificates of insurance (may be reclassified as payroll)
• Officer compensation: Payroll for included corporate officers
• Employee classification: Whether workers are correctly classified by job type

General Liability

• Revenue: Total gross revenue for the policy period
• Subcontractor costs: Payments to subcontractors that may be included in your exposure base
• Square footage: For premises-related coverage, the space you occupy

Types of Audits

Insurers may conduct audits in several formats:

1. Physical audit: An auditor visits your office to review records in person. This is the most thorough type.
2. Mail audit: The insurer sends a questionnaire and requests copies of specific documents. You complete and return them.
3. Phone audit: An auditor calls to review your records over the phone and may request documents by email.
4. Voluntary audit: Some insurers allow you to self-report your exposures through an online portal.

Preparing for the Audit

Good preparation makes audits faster and reduces the chance of unpleasant premium adjustments. Have these documents organized and ready:

• Vehicle schedules: A list of all vehicles operated during the policy period, with dates added and removed
• Payroll records: Quarterly wage reports, tax filings (941s), and payroll summaries by employee and classification
• 1099 records: Payments to independent contractors and subcontractors
• Certificates of insurance: COIs from all subcontractors showing they carried their own coverage
• Revenue records: Income statements or tax returns showing gross revenue
• Lease agreements: For owner-operators leased to your authority

What Happens After the Audit

After the audit, the insurer calculates the premium based on your actual exposures:

• Additional premium: If your actual exposures were higher than estimated (more vehicles, higher payroll, more revenue), you will owe additional premium
• Return premium: If actual exposures were lower than estimated, the insurer will issue a refund
• Minimum premium: Most policies have a minimum earned premium that applies regardless of actual exposures

Disputing Audit Results

If you believe the audit results are incorrect, you have the right to dispute them. Common disputes include:

• Subcontractors reclassified as employees when they had their own insurance
• Incorrect job classification codes applied to payroll
• Vehicles counted that were not in operation

Provide supporting documentation and work with your insurance agent to resolve disputes. For workers compensation audits, accurate record-keeping throughout the year is the best defense against unexpected additional premiums. Keep your records organized and monitor your insurance program through our carrier management tools.