Audit – a report of the policyholder’s exposures based upon either an auditor’s review of the policyholder’s records  or upon a signed payroll statement obtained from the employer.

Certificate of Insurance (COI) – an industry form that provides documentation of insurance coverage.

Check Audit – a short-term or interim period audit.  These are often used to assure that estimates are sufficient, that classifications are correct and that payroll are being properly reported.  Results of a check audit are compared with original policy and adjustments may be made as needed.

Classification (Class, Code, Class Code) – classification of occupations, employments, industries and businesses contained in the Uniform Statistical Reporting Plan.

Deposit Premium – a portion of the estimated annual premium. This is generally required when a policy is written.

Employee  all persons in the service of the employer who directs their work and their work hours.

Employer  a person, business, or industry that pays persons to perform work.

Entity  an individual, partnership, limited liability partnership, corporation, limited liability company, unincorporated association or fiduciary operation (trust, receivership or estate of a deceased individual). 

Estimated Premium – the estimated premium for the policy period, based on estimated payrolls and classification assignments.

Experience  payroll, premium, and loss data for an employer or standard classification.

Experience Modification  modification factor published by the WCIRB. Insurers are required to apply the modifier to the policy premium.

Experience Rating  a rating procedure that uses the employer’s past payroll and loss experience to forecast future losses. The employer’s loss experience is measured against loss experience ratings of employers in the same industry.

Exposure(s)  basis against which insurer rates will be applied and losses are compared. Generally, the exposure is the ‘payroll’ adjusted for applicable exclusions.

Field Audit – physical audit performed on-site at your company.

Final Audit – performed upon expiration of the policy for purposes of adjusting and reconciling the actual exposures to those estimated.  This audit may be conducted via mail, telephone, or as a physical audit.

Governing Classification – the classification code that generates the most payroll, other than a standard exception classification.

Multiple Enterprise – if the business consists of two or more distinct operations that do not normally prevail in the business described by a single classification, then the distinct operations may be separately classified subject to specific rules. 

Pure Premium Rate(s)  the loss cost per unit of exposure, including loss adjustment expense.

Payroll  payroll includes wages paid to your employees and contractors, as well as: commissions, bonuses, overtime pay, pay for holidays, vacations and sickness, payment for piece work, value of meals and lodging and other substitutes for money. State exceptions may apply. Payroll may also be referred to as “remuneration”.

Physical Audit  also referred to as the Field Audit which is conducted to calculate the final premium.

Single Enterprise – a business which consists of a single operation or a number of separate operations that normally prevail in the business described by a single classification.

Standard Exceptions  In California, Standard Exception employees are Clerical Office Employees (8810) and Salespersons – Outside (8742). There are specific rules associated with eligibility for assignment to these classifications.

Subcontractors (often also referred to as independent contractors) – those hired to perform a portion of the operations; outsourcing a portion of manufacturing, distribution or construction. Workers compensation laws may hold you responsible for individuals paid as subcontractors, Independent contractors, and for employees of an uninsured subcontractor.

Voluntary Audit  an audit that is based upon a signed payroll statement obtained from the employer.

WCIRB  the Workers’ Compensation Insurance Rating Bureau of California, a rating organization licensed by the California Department of Insurance and designated as the Insurance Commissioner’s statistical agent in accordance with the provisions of Sections 11750 et seq. of the California Insurance Code.

Workers’ Compensation  the obligation imposed upon an employer by the workers’ compensation laws of the State of California to pay the benefits prescribed by such laws.

Workers’ Compensation Insurance  insurance for workers’ compensation liability and also commonly refers to employers’ liability insurance.