Some policies are priced on estimates that later prove inaccurate. An audit premium is the additional amount charged after the insurer examines the insured’s actual exposure—payroll, sales, or other units—and finds it higher than the figure used to calculate the deposit premium.

Workers’ compensation, general liability, and commercial auto policies frequently include audit provisions. At policy expiration the insurer reviews records, computes the correct premium, and bills or refunds the difference. Under-reporting of exposure can trigger substantial additional premiums and sometimes penalties.

Insureds can reduce surprises by maintaining accurate records and understanding which classification codes apply to their operations. Premium auditors visit the premises or examine electronic data. Clear communication of the audit clause at inception helps avoid disputes when the final bill arrives.

• Additional premium from post-term exposure audit
• Common in workers’ compensation and liability lines
• Based on actual payroll, sales, or similar units
• Can result in refunds or large additional bills