Glossary  /  When things go wrong

Estimated audit

Also called forced audit, non-compliance audit

An estimated audit is the premium determination a carrier issues when an insured does not cooperate with the audit, calculated from assumptions rather than from records.

Nearly every workers' compensation policy grants the carrier this right, because a policy cannot be left permanently un-trued-up.

None of the usual protections apply, because the information they depend on was never supplied. Overtime is not excluded, officer caps are not applied, and payroll is not split across classifications. The result is built entirely from assumptions that resolve in the carrier's favor.

Why it matters at audit

An estimated audit is usually revisable if records are eventually produced. Arguing about the figure without supplying records is not, because there is nothing to recalculate from.

Related terms

  • Non-compliance chargeA non-compliance charge is an additional amount many states permit a carrier to add when an insured fails to cooperate with a premium audit, applied on top of the estimated premium.
  • Premium auditA premium audit is the review a workers' compensation carrier performs at the end of a policy period to replace the estimated payroll the policy was priced on with the payroll the business actually paid.

Back to the premium audit glossary