Online audit

When filling out your eReport, you will be asked to provide some of the following information such as:

• General information, including company and contact information
• Names of owners and officers
• Payroll information
• List of contractors/subcontractors
• Sales and other premium relevant information
• Claims information

eReport will only display screens that are relevant to your policy. eReport prepopulates details for returning users.

After you submit the audit form, you will receive an audit statement reflecting the adjustment of exposures on your policy to the audit findings. The statement will reflect an additional premium due to us, a premium credit due to you, or no change in premium, as applicable.

Our premium audit team can help. Complete our online request form, email us at premiumauditservices@libertymutual.com or call us at 1-888-224-9246 Monday through Friday 8 a.m. to 8 p.m. ET.

You can submit your premium audit via eReport up to 75 days from policy expiration.  Otherwise, you will no longer be able to access your audit information online and will need to submit a paper copy of the mail form.

The purpose is to determine actual exposures and classes of operation for the coverage we’ve provided for the applicable audit period. A premium audit protects both Liberty Mutual and our customers. Our auditors undertake this review of your company’s books and records to determine the correct exposure for the audit period and ensure the proper premium is collected for your policy.

In addition, audit information is filed as part of unit statistical data reporting, which determines your experience modification and is used in establishing appropriate premium rates for each state.

Here are some helpful tips to keep in mind:

• Maintain detailed records. Keeping comprehensive records makes the audit process easier and works to your advantage. Payroll records should indicate what types of jobs each employee completed during your policy term and how much was paid. For construction and erection operations, an employee’s pay may be allocated to more than one authorized classification if proper records are maintained. However, our auditors cannot divide an employee’s wages between more than one classification using a ratio or percentage split.
• Obtain certificates of insurance. If you use subcontractors, make sure you have their workers compensation and liability insurance certificates to prove that the subcontractor is an independent business. If evidence of insurance is not available, payments to subcontractors are included on the audit.
• Keep track of deductions. Depending on state law, you may be able to deduct a portion of costs such as:
  • Overtime pay
  • Restaurant tips (voluntarily given by customer)
  • Dismissal or severance pay
  • Business-expense reimbursements
  • Sales taxes
  • Other deductions

An owner or officer includes any corporate officer, limited liability company member, partner or sole proprietor. A corporate officer is defined as a president, vice president, secretary, or treasurer or other executive officer elected or appointed in accordance with the charter, bylaws, articles, or legal documentation of an organization.

No, please do not include names and payrolls within this section. Names and payrolls should be included under the Owner & Officer Information Section. If there are multiple owners/officers, extra lines can be added using the “+ Add a Row” link.

If any of the listed classifications do not fit an employee’s specific job function, then answer “Yes” to the question below the payroll section.  Be sure to include employees’ duties under the “Job Duties” column as well as all other applicable information.

Some employees may perform duties directly related to more than one properly assigned classification. According to the National Council on Compensation Insurance (NCCI) Basic Manual Rule 2-G, the payroll for such employees may be divided among the properly assigned classifications* provided that:

• The classifications can be properly assigned to the employer according to the rules of the classification system, and the employer maintains proper payroll records that show the actual payroll by classification for that individual employee (hourly breakdowns, timecards, etc.). Estimated or percentage allocation of payroll is not permitted.
• Records must reflect actual time spent working within each job classification and an average hourly wage comparable to the wage rates for such employees within the employer’s industry.

If payroll records do not show the actual payroll applicable to each classification, the entire payroll of the individual employee must be assigned to the highest-rated classification that represents any part of his or her work. In addition, payroll cannot be split between a clerical or sales class code and a basic classification. All payroll exposure will be included in the higher-rated class code due to the Interchange of Labor rule.

*Construction classifications are handled differently from other industries. Contact your auditor for more information. 

Clerical employees: 

• Per the NCCI Scopes Manual definition (Rule 1-B-2-a), the duties of a clerical office employee include creating or maintaining financial or other employer records, and handling correspondence, computer composition, technical drafting, and telephone duties, including sales by phone. A clerical office is a work area physically separated by floors, walls, partitions, counters or other barriers and distinct from all other work areas and hazards found on the employer’s premises. Independent state bureaus also provide the definition of a clerical employee in their state manuals. Most clerical employees are defined in a similar fashion to NCCI.
• An employee who has clerical duties but is also exposed to the hazards of the business would not be considered a clerical employee. A few examples would be a manager who has a desk on the manufacturing floor, a clerical employee who works in a store to cover breaks or lunches, and an office employee who does shipping and receiving work.

Outside salespersons.  NCCI Scopes Manual (Rule 1-B-2-b) defines salespeople as employees engaged in sales duties away from the employer’s premises. This classification is not available for employees who deliver merchandise. Independent state bureaus also provide the definition of an outside sales employee in their state manuals.

Drivers (drivers, chauffeurs, messengers, and helpers). These employees perform work on or in connection with a vehicle. This code includes garage employees and employees using bicycles as part of their work duties. Duties include, but are not limited to, delivering goods owned by the employer.

The NCCI Basic Manual does not allow businesses to split payroll between clerical, outside sales, and basic classifications.  While employees who are fully (100 percent) engaged in clerical, driving, or outside sales roles are excluded from the general liability audited exposure, their information should be provided for reconciliation purposes.

Yes. Because those employees were compensated during the policy period, their information must be included for the audit.

In order to accurately reflect an employee’s duties/responsibilities during a policy period, split that employee’s actual payroll over two/numerous lines based on their job and earnings at any given time.

When completing your report, submit the following information for each of the following roles:

• Manager/supervisor: what they are managing/supervising
• Executive supervisors/job foreperson description of project and who they are managing
• Quality assurance: please note if they are working in the plant
• Plant manager: what their regular roles and duties are

For every audit, we use two separate sources for payroll verification. One is what you provide us in your report and the other is the Federal Form 941 figures noted on your mail form. Having two sources of verification ensures that the appropriate amount of payroll is applied to your audit. This confirmation validates the information provided and confirms your audit is as accurate as possible.

To verify your payroll, we are required to use your 941 payroll filings.

These records are used to verify any off-payroll exposures. In most states, workers compensation laws stipulate that a contractor is responsible for the payment of compensation benefits to employees of uninsured subcontractors. You must furnish satisfactory evidence that the subcontractor has workers compensation insurance in force, covering the work performed for the insured during the policy period.

For general liability:

• Uninsured or under-insured subcontractors are treated as employees and will be included under the appropriate payroll classification. Your policy will define what is adequately insured.
• Adequately insured subcontractors are included in the exposure under one of the 10 Contractors – Subcontracted Work classifications. Even if the subcontractor has adequate insurance, the mere fact that you used a subcontractor creates an additional exposure known as vicarious liability. The basis of premium for this exposure is total cost. Total cost is defined as labor, materials, and equipment. We need to obtain the total amount paid to the subcontractor, the total they billed you for materials, and the total value of any materials or equipment that you supplied to the contractor for their use in completing the work.

The auditor will ask a series of questions about the method and frequency of payment(s), the relative nature of the work, and the amount of direction and control to determine if the subcontractor is in fact independent. If the subcontractor is not deemed independent based on the responses, the contractor will be included in the audits as an uninsured subcontractor. Many states have additional rules regarding independent contractors. The auditor will follow these rules when determining if a contractor will be included in the exposure.

If the subcontractor has no employees, some states do not require workers compensation coverage. However, the auditor needs to determine if an employer-employee relationship exists between the insured and subcontractor.  

If an employer-employee relationship exists, Liberty Mutual Insurance may be liable for any claims the individual may file. Each state has different requirements to determine independent status. A general liability insurance certificate does not replace workers compensation coverage. 

Proof of coverage is required for all subcontractors regardless of the amount of payment. The $600 IRS limit does not apply to the calculation of workers compensation or general liability premium.

The document does not waive the right of the subcontractor to file a claim. Therefore, without a valid certificate of insurance, the exposures are included for premium calculation purposes.

An occupational health policy is not the equivalent of a certificate of insurance, nor does it replace workers compensation coverage. In some states, it may assist in the validation of “independent status.”

A general liability insurance certificate does not provide workers compensation coverage. General liability coverage is just one factor that can be taken into consideration when determining independence.