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  • Writer's pictureFey Bruder Insurance

The General Liability Insurance Audit Process

As a business owner, you're likely familiar with the various types of insurance policies needed to protect your assets and operations. General liability insurance is one of the most common policies, safeguarding your business against claims of bodily injury, property damage, and advertising injury that occur during the course of business operations. But what happens when it's time for your insurance provider to conduct an audit on your general liability policy? In this blog, we'll walk you through the ins and outs of a general liability insurance audit and provide you with tips to prepare for it.


Understanding the Purpose of an Insurance Audit


The primary purpose of an insurance audit is to adjust your premium based on the actual exposure your company faced during the policy period, as opposed to the estimates provided at the start of that period. Insurance companies conduct audits to ensure that the premiums you've been paying match the level of risk you've actually experienced. If your business operations have changed, leading to more or less risk than initially assessed, your premium will be adjusted accordingly.


Types of General Liability Insurance Audits


There are generally two types of audits that your insurer may conduct: physical audits and virtual audits. Physical audits involve an auditor visiting your business location to review records and operations in person. Virtual audits, on the other hand, are conducted remotely, with the business owner providing necessary documentation electronically or via mail.


The Audit Process


1. Notification: Your insurance company will notify you in advance that an audit will take place. This notification will include the time frame of the audit and the records you will need to provide.


2. Record Collection: Be prepared to provide records relevant to your general liability coverage. This can include sales records, payroll information, contractor certificates of insurance, and any other documentation that reflects your business activity.


3. Review of Operations: The auditor will assess your business operations to determine if they align with the classifications and estimates used to calculate your premium.


4. Premium Adjustment: After reviewing your records and operations, the auditor will calculate your final premium. If your business had more exposure than estimated, you might owe additional premium. Conversely, if the exposure was less, you may receive a credit or refund.


Preparing for Your Audit


To ensure a smooth audit process, it’s crucial to keep organized, accurate records throughout your policy period. Here are a few tips to prepare for the audit:


  • Maintain clear, up-to-date financial records. This includes sales receipts, payroll data, and any subcontractor payments.

  • Keep a detailed account of your business operations, including any changes that have occurred during the policy period.

  • If you work with subcontractors, ensure you have copies of their certificates of insurance.

  • Review your current policy and understand the classifications and rates that your premium is based upon.

  • Be ready to explain any discrepancies or changes in your business operations to the auditor.




An insurance audit can seem like a daunting task, but understanding how it works and preparing accordingly can make the process much smoother. Remember, the goal of the audit is not to penalize your business but to ensure that your general liability insurance coverage reflects your actual business risks accurately. By maintaining good records and being transparent with your auditor, you can navigate the audit process with confidence and continue to safeguard your business against potential liabilities.

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