Why is workers’ compensation an "auditable" policy?

In short, these policies are auditable (meaning they are subject to confirmation of things like annual employee payroll) because changes happen within businesses throughout the year that can impact the cost of the insurance. A workers’ compensation premium audit will be performed after each policy period at an insurer’s discretion to verify payroll, class codes, and perhaps other factors (such as subcontractor exposure) depending upon the class and the laws of each state. A variety of methods can be used (phone calls, mailings, or in-person visits to your operation), though the goal is always the same – to find out whether the payroll and class codes used to determine your premium accurately reflect the payroll and scope of work performed during the policy period. For certain classes, audits also ensure that subcontractors had their own coverage in place. If not, you may be charged for their exposure on your policy as well.