Guide
Premium audits and subcontractors: how a missing certificate costs you
Once a year your insurer audits what you paid in wages and to subs. If a sub has no certificate on file, many insurers count that sub’s cost as your payroll and bill you for workers’ comp on it. Certificates for every sub, kept current, are usually how you keep subs out of your premium. Ask your carrier how yours handles it.
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Free COI auditWhat a premium audit is
When you buy general liability or workers’ comp, the price starts as an estimate. At the end of the term your insurer checks the real numbers: payroll, and money paid to subs. Then it adjusts the bill up or down.
Where subs come in
The auditor asks for proof that your subs carry their own insurance. No certificate on file for a sub? Many insurers treat that sub’s work as your own and charge you for it. It can be a surprise bill.
How your insurer handles this is in your policy and your audit rules. Ask your broker.
What to keep for the auditor
- A certificate for every sub, covering the full work period.
- Dates that don’t have gaps between renewals.
- Proof of workers’ comp or a valid exemption where your state allows one.
- Your contract or sub agreements.
A record of who checked what and when helps too. That’s the log we keep for clients.
Not legal or insurance advice. This is general information. Your contract, your state and your policy decide what applies to you. Ask your broker or attorney.
A simple habit
At the end of each month, list the subs you paid. Check each one against your certificate file. Anyone without a current certificate gets chased that week, not at audit time.
Frequently asked questions
Do premium audits count subcontractors?
Many insurers look at what you paid subs and ask for certificates. If a sub has no proof of insurance, the insurer may treat the cost as your payroll for the premium.
What do I need to show an insurance auditor about my subs?
Certificates of insurance covering the whole period each sub worked for you, and proof of workers’ comp or a valid exemption where your state allows one.
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