Glossary of Terms

ANC, or Audit Noncompliance Charge, is a fee levied on the policy when the insured does not allow the carrier to complete the audit. This charge could be up to a 200% increase in some states. By responding timely to an audit request, you can reduce the risk of an estimated audit.

The exposure is the amount of payroll, sales, costs, or other basis which rates are applied to determine the premium. The estimated exposure is value projected for the policy term.

When an employee performs duties across difference classifications.

Transactions between two or more legal entities on the same general liability policy.

For Workers' Compensation, the premium basis is always payroll. General Liability premium basis can include payroll, sales, costs, units, gallons admissions or each.

Payroll

Remuneration means either money or substitutes for money. Payroll can include: Wages; Bonuses; Holiday Pay; Sick Pay; Commissions; Overtime Pay; Vacation Pay; Payment for Piece Work.

Sales

The total amount charged by you to others for all goods or products sold or distributed and all operation performed by you for others. This includes cash or trade discounts and does not include sales or excise taxes collected and submitted to government entities, credits for returned products, and freight/delivery charges if these are charged as a separate item on the customer's invoice.

Costs

The total amount paid to another organization for the cost of all labor, materials, and equipment furnished used in the execution of work they were hired to perform.

Gallons

The total number of gallons sold to customers.

Admissions

The total number of persons, other than working employees of the named insured, admitted to the event or events. This basis of premium will include all event attendees whether on paid admissions, tickets, complimentary tickets or passes.

Each

The number or each unit of exposure as noted in the classification footnote such as "per person" or "per event"

The compensation for hours worked at an increased rate of pay. The premium overtime is the amount paid over the base pay.

Standard Exceptions refers to workers' compensation class codes used for clerical office employees, clerical office telecommuters, Drivers, outside sales people and automobile salespersons.

An auditor will look to understand the financial exposures of your company. Typically source documents are required and reconciled against verification documents which include but are not limited to:

Payroll – Federal Quarterly Tax Reports (941's), State Quarterly Tax Reports (state unemployment)

Sales – Income statements, sales tax returns

Costs – Tax Form 1096, Income/Profit and Loss Statements, Tax Returns (Schedule A or Schedule C)

Insurance programs for large construction projects that can include the project owner, general contractors and enrolled contractors/subcontractors working on a named project.