How does the workers' comp annual audit work?
WC premiums are based on estimated payroll at the start of the policy year. At year-end, the carrier audits actual payroll by class code and adjusts: more payroll than estimated means an additional premium bill; less payroll means a refund. The audit also looks at uninsured subcontractors (whose payroll may be added to yours), misclassified employees, and payroll allocation between class codes. Common audit surprises in NY healthcare practices: clinical employees with mixed clinical/admin duties getting reclassified to the higher clinical code on their full wages. We pre-review audits before they go to the carrier to catch errors and contest reclassifications where the records support it.
- Category
- Business Insurance
- Audience
- For existing clients
- Topic
- Workplace & Workers' Comp
Related FAQs
Are owners and officers covered by their own WC policy?
It depends on entity structure. In NY, members of LLCs and partners in partnerships are not automatically covered and may elect coverage. For-profit corporation officers who are also shareholders may exclude themselves under specific conditions (Form C-105.51). Sole proprietors with no employees are exempt from carrying coverage at all but may elect to cover themselves. We walk through these elections at policy issuance — owners often want coverage for themselves because their personal health insurance excludes work-related injury.
Read answerAre wage and hour claims covered by EPLI?
Inconsistently. Most EPLI policies cover defense costs for wage and hour claims (FLSA, NY Labor Law) but exclude indemnity for the underlying wage liability — the rationale being that paying owed wages isn't a "loss," it's a debt. Some policies offer a defense-only sublimit (often $100K–$250K). NY wage and hour exposure is severe — NY Labor Law §198 allows liquidated damages plus attorneys' fees, and class actions on misclassification, off-the-clock work, and meal/rest breaks are common. Confirm wage and hour…
Read answerDo I need commercial auto insurance?
If your business owns or leases vehicles, yes — your personal auto policy almost certainly excludes business use, and a claim arising from a business-use accident on a personal policy will be denied. You also may need commercial auto if your employees regularly drive their own personal vehicles for business (in which case the right product is **hired and non-owned auto** — HNOA — which can be added to a BOP or general liability policy). Healthcare practices that do home…
Read answerDo I need WC if I only have 1099 contractors?
Often, yes. NY (and most states) applies a substance-over-form test — if a worker functions like an employee (you set hours, supervise the work, provide equipment, pay regularly), they're an employee for WC purposes regardless of how their tax form is labeled. NY's WCB has been particularly aggressive on misclassification audits in healthcare, construction, and home-services industries. If you genuinely use independent contractors, get certificates of insurance from each one showing they carry their own WC coverage; if they don't,…
Read answerDoes commercial property cover floods or earthquakes?
Almost never — both are standard exclusions in commercial property policies. Flood requires a separate NFIP policy or a private flood policy; earthquake requires either an endorsement (where available) or a standalone policy. NY is not in a high earthquake risk zone, but flood is genuinely material — much of NYC, Long Island, and the Hudson Valley sits in mapped FEMA flood zones, and a single flooded basement can run $100K+ in property and inventory losses. If your premises are…
Read answer
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