The primary responsibility of the Premium Audit Department is to conduct a comprehensive examination of a policyholder’s records in order to determine the actual insurance risk for the coverage period provided.

To ensure that Beacon charges you the correct premium for your workers’ compensation coverage, an audit of your operations is required. The audit verifies your type of business, number of workers, and overall exposure during your policy period. An audit may be waived, conducted by mail, over the phone, or in person by a premium auditor.

Prepare for a Workers’ Compensation Audit

It is important to have a representative who is knowledgeable about the operations available to respond to questions involving operations, job descriptions, officers/owners and, other questions.

Advanced preparation will help the auditor quickly find what he or she needs and will require less of your time for questions and/or clarifications during the actual audit. To make your audit as convenient and expedient as possible please be prepared with the following:

  • Payroll records showing total gross payroll by employee, by company, or by department.
  • Payroll records showing overtime separately.
  • If you are a contractor, keep a workers’ compensation worksheet showing gross payroll by job and classification.
  • Certificates of workers’ compensation insurance for all subcontractors.
  • List of temporary employment agencies used during the audit period, along with the agency’s DWC-09 form.
  • DWC-11-IC forms for all independent contractors filed with the Department of Labor & Training.
  • Business invoices & general liability certificate for all independent contractors.

All subcontractors and independent contractors that have not provided Beacon Mutual with either a certificate of workers’ compensation insurance or a legitimate DWC-11-IC form (and General Liability certificate) will be included in the audit and billed premium charge. Despite provision of these documents, Beacon Mutual, as well as the Workers’ Compensation Court, may still determine that there is an employer/employee relationship.

Required Records

The following represents the most common records utilized in a successful premium audit:

  1. Payroll registers
  2. Quarterly payroll tax reports (state and federal)
  3. Cash disbursements journal
  4. Job contracts for contractors
  5. Invoices for temporary employment agencies
  6. Certificates of workers’ compensation insurance for subcontractors
  7. DWC-11-IC forms for independent contractors:
    • Business Invoices
    • General Liability Certificate for contractors
    • DWC-09 for Temporary Employment Agencies
  8. Description of your company’s operations
  9. A list of the corporate officers (names, titles, duties)

Independent Contractors

The State of Rhode Island Workers’ Compensation Law requires that an employer with one of more employees have a workers’ compensation insurance policy. If an employer retains an individual who is an independent contractor as opposed to hiring the individual, they are not obligated to carry workers’ compensation for that individual.

Effective January 2001, an independent contractor status is documented by filing a form entitled “Notice of Designation as Independent Contractor” pursuant to R.I.G.L. 28-29-17.1. The independent contractor will file a DWC-11-IC form with the Department of Labor and Training. Forms may be downloaded from the RI Department of Labor and Training website.

Mail Audits

A mail audit is a self-audit completed by the policyholder. A cover letter with a two-page mail audit form and instruction sheet, Mail Audit Made Simple, is sent to the policyholder. The policyholder answers questions on the mail audit form and returns it with the corresponding support information.