DEPOSIT PREMIUM OR FORECASTED PREMIUM
On a new or a renewal Workers' Compensation policy, the normal procedure is to estimate payroll in each applicable classification and pay a deposit premium. At the end of the policy period, the actual payroll is determined and an adjusted premium is determined. This is known as a premium audit.
An additional premium is billed if payroll is underestimated by classification(s).
A refund is given if payroll was overestimated by classification(s).
Not reviewing and updating data for a year could give you a pocketbook attack!
Many insurance companies have multiple premium payment options
on the deposit premium:
monthly
quarterly
semi-annual
annual
The best pay plan for businesses that have fluctuating payrolls (or significant payrolls) is a Monthly Reporting Form. This pay plan allows the insured to remit premiums based on actual wages incurred. This format could be thought of as a pay-as-you-go plan. It is the best cash flow pay plan available. It is awful for a business to be saddled with a fixed premium on a monthly basis when there has been no work performed. What bookkeepers and business owners like best about a properly understood Monthly Reporting Form is... NO SURPRISES!
Audited Premium or Final Premium will be explored in an upcoming blog.
ABOUT CHRIS
Current
Host of Work Comp Chaos | licensed in multiple states as both an insurance adjuster & agent
Vice President of The Southern Agency in charge of Operations and Claims
United Heartland Insurance Company Claims Advisory Council
Prior
State of Tennessee Telehealth Advisory Committee assisting in developing rules and statutes
Utilization Review Advisory Committee
Past President of the Tennessee State Claims Association
Served 15 years as President of the Chattanooga Claims Association
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