Navigating a General Liability (GL) insurance audit can feel daunting – but with the right knowledge and preparation, it needn’t be. These annual (or periodic) audits help ensure your coverage, premiums, and business data are aligned. 

In this blog, you’ll discover what to expect from the audit process and how to prepare effectively, reducing surprises – and costs.

What Is A GL Insurance Audit?

A GL audit is a review of your business’s financial records – like gross sales, payroll, subcontractor costs, and job classifications – to verify that your premium accurately reflects your exposure to risk.

It’s typically done at the end of your policy term, though auditors may act mid-term if significant changes occur.

Why It Matters

• Fair Premiums: If your sales or payroll were underestimated, you’ll owe more. If overestimated, you could get a refund.
• Adequate Coverage: Prevents becoming underinsured if your business grows.
• Contractual & Legal Compliance: Many industries require full insurance compliance; failure may lead to policy cancellation, nonrenewal, or penalties.

What To Expect During The Audit

1. Notification: Usually 30–90 days after your policy ends, via mail, email, online, or phone.
2. Questionnaire & Instructions: The auditor asks for payroll, sales data, subcontractor lists, and COIs.
3. Document Submission: Provide primary records (e.g., gross payroll ledgers) and secondary tax proofs like 941/940 or W‑2s/1099s.
4. Review: Auditor compares data to your initial estimates; may interview you or visit your premises for larger operations.
5. Results & Follow‑Up: You’ll receive an audit summary showing adjustments. Pay any owed difference – or receive a refund if applicable.

Key Documents & Records To Gather

Maintain the following, continuously updated and organized:

Category	Examples
Payroll Records	Gross pay, overtime, tips, bonuses; quarterly tax forms (940/941)
Sales Reports	P&L or income statement for the policy period
Tax Documents	W-2s, 1099s, filed quarterly/annual returns
Subcontractor Info	Payments, job descriptions, COIs – ensure proper insurance
Employee Classifications	Role descriptions, work locations – essential for proper risk rating
General Ledger	Cash disbursements, check registers, GL summaries

Pro Tips To Be Audit‑Ready

• Organize Year‑round: Don’t scramble at year-end – keep records accessible.
• Create an Audit Checklist: Include all document categories above for quick self‑checks.
• Boss or Knowledgeable Rep Available: The person who knows your business should be present, especially during onsite audits.
• Clarify Misclassifications Early: Review payroll roles and classifications before submission .
• Collect COIs Regularly: Require COIs from subcontractors quarterly to avoid missing lapses.
• Communicate with Insurer/Broker: Notify them of mid-term changes (e.g. staff growth, new services).
• Know Your Policy’s Audit Type: Understand if it’s “two‑way” (refunds allowed) or “one‑way”.

Common Triggers For Mid‑Term Audits

• Rapid payroll or revenue growth
• Adding subcontractors without COIs
• New services, locations, or business classifications
• Multiple or large claims history

If you anticipate these, reach out proactively to adjust your policy.

After The Audit: Review And Respond

• Review Summary carefully; errors can be appealed.
• Pay discrepancies – extra premium typically due post-renewal.
• Refund or credits: Two‑way audits allow auditors to owe you if overpaid.
• Incorporate findings: Use audit results to improve data collection and forecasting for next year.

Frequently Asked Questions

Can I dispute the audit results?

Yes – you have the right to dispute if you believe the auditor made errors. First, request a copy of the auditor’s worksheet to check for miscalculations or misclassifications. Then draft a clear dispute letter outlining discrepancies and include supporting documentation. Submission deadlines vary, so act promptly.

Who conducts the audit – my insurer or someone else?

Audits may be performed by in-house teams or independent audit firms hired by your insurer. For example, Erie Insurance may use its own auditor or a contracted company. Either way, you’re entitled to a professional and confidential review of your records.

How long does the audit process typically take?

Most audits are completed within 30 to 90 days after your policy ends. Smaller businesses often finish closer to 30 days, while larger or complex operations can take longer – especially if on-site visits are involved.

Are all policies subject to audit?

Not always. Commercial General Liability (CGL) policies are typically audited, while Business Owner Policies (BOPs) may explicitly state they’re not subject to premium audit. Always check the “Conditions” section of your policy for audit terms.

What counts as payroll or sales in the audit?

Auditors include all insurable payroll, such as wages, overtime, bonuses for employees, and payments to subcontractors – but they will exclude non-insurable amounts like sales tax or purely administrative payroll. Accurate classification is key: office or sales staff payroll is often excluded unless they perform field or risk-related work

Audit Your General Liability Insurance; Save Time & Money

A general liability insurance audit is a routine – but important – check to make sure your business pays the right amount for its actual risk. It’s not an intrusion; it’s an opportunity. By staying organized, communicating with your insurer, and maintaining accurate records, you can turn audits into a strategic benefit: claim savings, ensure compliance, and reinforce risk management for future growth.

Ready to simplify your GL audit process? Visit General Liability Insurance US for expert guidance, customizable checklists, and policy advice tailored to your business needs – so you’re always ready when audit time arrives.