
Canceling your insurance policy can have serious consequences, including an insurance audit after cancellation. This audit can result in a significant increase in your premium or even a policy cancellation.
If you've canceled your insurance policy, you may be surprised to receive a notice from your insurance company requesting an audit of your policy. This audit is usually triggered when a policy is canceled within a certain time frame, typically 60 to 90 days.
An insurance audit after cancellation can be a complex and time-consuming process. In some cases, the audit may reveal that you were over-insured or under-insured, leading to a reassessment of your premium.
Your insurance company may request documentation, such as receipts or invoices, to verify your claims and assess your coverage. Failure to comply with the audit request can result in a policy cancellation or a significant increase in your premium.
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What Happens After Cancellation
Even though your policy is cancelled, you're still required to complete the audit for the time your policy was active. This is a standard procedure, so don't worry, it's not a one-time thing.

You'll need to review your policy documents and financial records to ensure everything is in order for the audit. This will help you stay on track and avoid any last-minute surprises.
The audit covers the entire period your policy was active, so make sure to gather all relevant information from that time frame. This might include receipts, invoices, and other financial documents.
Don't put off the audit, as it's a crucial step in the cancellation process. You'll want to get it done as soon as possible to avoid any delays or complications.
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Consequences of Non-Completion
If you don't complete your audit, you'll face serious consequences. Any active policies will be cancelled.
You'll be unable to get coverage in the Assigned Risk Plan again until your premium audit is completed. This means you'll have to find alternative insurance coverage, which can be a hassle and might even be more expensive.
There's also an additional audit non-compliance charge of 200% of your estimated annual premium. This is a hefty fine that will add to your financial burden.
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What's My Premium Process?

Your premium process will be conducted either physically at your location or online, depending on the size and type of your business.
For online premium audits, you'll receive a letter with instructions on how to submit the records needed to complete your audit shortly after your policy expires.
A physical premium audit will require you to schedule an appointment with the listed auditor, who will come to your location to conduct the audit.
The auditor's name and contact information will be included in the letter you receive shortly after your policy expires.
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What Is "Being Audited"?
Being audited is a process that happens after your workers' compensation policy expires. Your actual premium exposure during the policy period will be determined by the premium audit.
The premium audit will take your payroll or exposure into account, and you'll receive a Final Statement of Audit once it's completed. This statement will show if you owe any additional premium or if you'll receive a credit due to the adjustment.
What Happens If I Don't Complete My

If you don't complete your audit, your active policies will be cancelled. This means you won't be able to get coverage in the Assigned Risk Plan again until your premium audit is completed.
You'll also face an additional audit non-compliance charge of 200% of your estimated annual premium. This is a significant penalty to consider.
If you don't have a QuickBooks report or similar accounting program annual report, you must submit business taxes with the premium audit. Failing to do so will result in your policy being cancelled due to non-compliance.
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Cancelled Policy: Complete Task
You still have to complete the audit even if your policy is cancelled. The audit is for the period of time your policy was active, so you'll need to complete it for that time frame.
The audit must be completed, regardless of the policy status. This ensures that all necessary information is gathered and accounted for during the time your policy was in effect.

You'll need to gather all relevant documents and information to complete the audit. This will help you accurately report on your policy's activity during the time it was active.
The audit is not cancelled just because your policy was cancelled. You'll need to see it through to completion to ensure everything is in order.
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Frequently Asked Questions
What happens if I ignore an insurance audit?
Ignoring an insurance audit can lead to financial penalties, policy cancellation, and even legal action. Missed audits can also result in increased premiums and debt being sent to collections.
How long after cancellation of an insurance policy may an insurer conduct a deposit premium audit?
An insurer must conduct a deposit premium audit within 180 days of a policy's expiration date. Failure to do so within this timeframe may result in a violation of insurance regulations.
Sources
- https://societyinsurance.com/blog/insurance-premium-audit-faqs/
- https://societyinsurance.com/blog/insurance-premium-audit-checklist/
- https://www.superiorpoint.com/premium-audit-questions/
- https://www.lwcc.com/resources/premium-audit-preparation-a-guide
- https://www.countryfinancial.com/en/client-support/faqs/commercial-premium-audits.html
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