Premium Audit
A review conducted by the insurance company after the policy period ends to determine the final premium based on the actual exposure of the business
Detailed Explanation
The initial premium is often an estimate, and the audit ensures the premium accurately reflects the business's actual risk during the policy year. This is common for policies like workers' compensation and general liability.
Practical Example
At the end of the year, John's construction company undergoes a premium audit for their workers' compensation policy to reconcile the estimated payroll used to calculate the initial premium with the actual payroll for the year.
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