Premium Audit FAQs

What does the premium audit process entail?

A premium audit is a comprehensive examination of a policyholder’s records, operations, and books of accounts, in order to determine the actual earned premium for the coverage period provided along with the correct classification of the operations.

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What criteria are used to determine an independent contractor?

​Although no one factor is determinative, issues such as work schedule control, invoicing, uses of tools/equipment, as well as the existence of a separate liability policy, are taken into consideration when determining if an employer / employee relationship exists.  An independent contractor is defined as a person who files a DWC-11-IC “Notice of Designation as Independent Contractor” with the Rhode Island Department of Labor & Training​.

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Who is responsible for Subcontracting Arrangements?

​The principal contractor is liable for injuries to uninsured subcontractors' employees.​

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What if a company has out-of-state work and/or payroll?

​Rhode Island-hired employees who are assigned to incidental employment in another state are covered by our "temporary exposure in other states" policy provision. Employees assigned for extended periods or permanently located in another state should be covered by a policy which we can issue through a partner for that state.​

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Are there special things to consider if a company has employees 16 years old and younger?

​Employees who are 16 years old or younger need working papers. Under Rhode Island workers' compensation law, an employer must pay triple damages for minors employed in violation of the law.​

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What if subcontractors are used?

​For each subcontractor you hire, Beacon Mutual's auditors will look for either a certificate of workers’ compensation insurance or DWC-11-IC “Notice of Designation” for a sole proprietor or partner with no employees or a certificate of general liability.  All subcontractors and independent contractors that have not provided Beacon with either a certificate of workers' compensation insurance or a legitimate DWC-11-IC form and General Liability certificate, will be included in the general contractor's audit and bill for premium charge. Beacon, like the Workers' Compensation Court, may still determine that there is an employer/employee relationship. In making the determination, consideration will be given to the following: who controls the detail of the work; who is responsible for the detail of the work; how is the individual paid; is there a job contract; does the independent contractor invoice the insured for work performed; does the independent contractor have a general liability insurance policy and/or a business license.​

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