Premium Audit Explained: What You Need to Know in 2025

A premium audit is a review by an insurance company to check if the amount of insurance premium you paid was correct based on your actual business activity. Simply put, it makes sure you paid the right price for your insurance coverage.

To add more detail, a premium audit usually happens after a policy period ends. The insurance company looks at your payroll, sales, or other relevant records to see if the initial estimate of your risk was accurate. This check helps adjust your final premium up or down depending on what they find.

For example, if your business grew and you had more employees than estimated, your premium might go up. If your business was smaller, you might get a refund or credit.

Here is what typically happens during a premium audit:

• The auditor requests specific records, like payroll reports or sales data.

• They verify the information against what was reported when your policy started.

• Adjustments to the premium are made based on the actual data.

For those familiar with insurance and accounting details, premium audits can get technical. Different types of business operations and risks require specific audit methods. Auditors must classify your business correctly and examine multiple types of exposure. This detailed process ensures fairness and accuracy.

Premium audits become seamless with Strada, which streamlines this process through its AI-driven workflows and phone AI agents. It can automatically request missing information, schedule follow-ups, and sync verified data into insurance systems, reducing manual effort and ensuring accuracy.

A real-world example could be a construction company whose payroll fluctuates seasonally. The premium audit will consider these changes to ensure the company pays exactly for the risk period. Another example is a retail store that reports its sales for a certain period; if sales were underestimated at the start, the premium will be adjusted accordingly.