Our insurer sent the HOA a premium audit request. How should the board respond?

By OurHOA · General information · Revised November 3, 2026

How an HOA board handles a workers' comp or liability premium audit: records to pull, contractor certificates, checking the worksheet, and disputing a bill in TX, FL, CO.

Part of the HOA board handbook: vendors, projects and upkeep.

The short answer

Answer it, on time, with clean records. A premium audit is the insurer checking the numbers your premium was based on. A workers' compensation policy is priced on an estimate of payroll made when the policy starts, and the insurer audits actual payroll after the term ends. The Texas Commissioner of Insurance described it that way in Order 4448: the final premium can go up or down as a result. A general liability policy works the same way when it is rated on payroll, receipts or the cost of subcontracted work. If yours is rated per unit or per square foot, the audit usually changes little. The treasurer should own the audit. Gather the records in a week, sit in on the review, check the auditor's worksheet line by line before the bill arrives, and bring any disputed charge to the board with a written reason. Rules differ by state, by insurer and by your governing documents, so treat this as education and loop in your agent early. It is not legal advice.

What the auditor will ask for

Expect a letter or email soon after the policy expires, with a deadline to send records. Small policies often get a mail audit, where you fill in a form and attach records. Larger ones get a visit. Pull these before anyone calls back: the payroll register for the policy period, by person, with job titles; the quarterly federal Form 941 filings and state unemployment wage reports for the same quarters; the general ledger or check register, so the auditor can see every payment for labor; a list of every contractor paid during the term, with what they did and how much you paid them; and a current certificate of insurance from each of those contractors showing workers' compensation and general liability for the dates they worked. Florida writes the scope into law. Section 440.381(3) says payroll audits must review all payments to employees, subcontractors and independent contractors, and may use state and federal wage reports, accounting records and subcontractors' certificates of insurance. Colorado's section 8-44-107 lets a workers' compensation carrier ask the commissioner of insurance for permission to examine the books of an insured employer and of its contractors. In practice the auditor looks at the same things everywhere.

Why uninsured contractors show up on the bill

This is where small associations get surprised. The pool attendant's wages are easy to explain. The $24,000 paid to a landscaper who never sent a certificate is not. When the association hires a contractor with no workers' compensation of its own, the association's insurer may be on the hook if that crew gets hurt, so the auditor can count what you paid that contractor as if it were your payroll, at the contractor's class rate. Colorado's section 8-41-401(1)(a) treats a business that contracts out its work as the employer of the contractor and the contractor's employees for compensation purposes. A worked example, with made-up rates: the policy was written on $12,000 of estimated payroll for a part-time pool attendant. The audit finds $14,500 in actual wages and $24,000 paid to an uninsured landscaper. At a rate of $2 per $100 for the attendant and $7 per $100 for landscaping, the extra premium comes to about $50 for the attendant and $1,680 for the landscaper. The fix is the certificate, collected before the work starts. Our guide on how to check a vendor certificate of insurance covers what to look for on one.

Check the worksheet before you sign

Ask the auditor for the audit worksheet or summary before the insurer issues the bill. Check four things. First, the payroll totals should match your 941s and state wage reports for the policy dates, not the calendar year. Second, each person should sit in the right class code; a bookkeeper coded as a maintenance worker pays a field rate on an office job. Third, every contractor the auditor charged should be one you paid during the term and who lacked coverage for those dates. If you have a certificate the auditor missed, send it. Fourth, payments that were not labor, such as materials, equipment rental or a utility bill, should not be in the payroll column. Florida's statute requires the employer or a corporate officer and the auditor to sign the audit document when it is done, so in Florida someone on the board will be asked to sign. Read it first. You can use this note when you send corrections: 'Attached are certificates of insurance for Green Acres Lawn and Pool Pros covering the full policy period. Please remove the $24,000 and $3,100 charged as uninsured contractors and send a revised worksheet before final billing.'

Disputing the result in Texas, Florida and Colorado

Start with the insurer in writing, and keep the letter short and specific. In Texas, the carrier assigns classification codes under the workers' compensation manuals. Commissioner's Order 2020-6301, which applies to policies effective on or after June 1, 2020, says that if the carrier and policyholder cannot agree on a code they can ask the rating organization, NCCI, for help. That help is voluntary and does not stop either side from going to court at any time. Texas also rejected an audit noncompliance surcharge in Order 4448 in 2016, noting that a carrier's remedy for an uncooperative employer is to cancel the policy or estimate the payroll. In Florida, section 627.371 lets a person aggrieved by how an insurer applied a rating plan or rule ask the insurer in writing to review it. If the insurer does not grant the request within 30 days, you may treat it as rejected and file a written complaint with the Office of Insurance Regulation. Colorado has the most defined path for classification fights. Under section 8-44-108, the employer asks the insurer in writing within 30 working days after the policy anniversary date or after receiving notice of a classification change. The insurer must answer in writing within 30 days. The employer can then appeal to the workers' compensation classification appeals board within 30 days after finishing the insurer's own review under section 8-55-102. Section 8-55-104 lets you hold the disputed amount while the appeal is pending, but if you lose you pay it plus 1 percent a month in interest.

A sample timeline and a board motion

For a policy that expires January 1: by mid-January, the auditor's request arrives and the treasurer confirms the deadline with the agent. Within a week, the treasurer pulls the payroll register, the four quarterly 941s, the contractor list and the certificates, and chases any missing certificate from vendors directly. Late January or early February, the audit happens by mail, phone or visit. Within days of the review, ask for the worksheet and send corrections in writing. When the bill arrives, compare it to the worksheet. If it is right, pay it by the due date. If it is wrong, bring it to the next board meeting. A motion the board can adapt: 'Move to authorize the treasurer to dispute in writing the $1,680 uninsured contractor charge on the 2026 workers' compensation audit, on the ground that Green Acres Lawn carried coverage for the full period, and to pay the undisputed balance of $50 by the due date.' Record the vote and attach the letter to the minutes.

Mistakes that make audits expensive

Ignoring the request is the worst one. Florida's section 440.381(5) charges an employer $500 when it fails to give the auditor access and the audit cannot be completed, and Texas's Order 4448 notes that a carrier facing an uncooperative employer can cancel the policy or estimate the payroll itself. Section 440.381(6) goes much further when an employer understates or hides payroll or misstates employee duties: a penalty of 10 times the premium difference, plus attorney's fees. So never lowball the estimate on the application to shave the deposit. Florida's rule 69O-189.003 also requires a final audit every year on voluntary market policies, with physical audits for estimated premiums of $10,000 and up, so this will not be a one-time event. Other mistakes: paying cash to a handyman with no paperwork, letting a contractor's certificate lapse mid-contract, coding the on-site manager or clerical help in a field class, and forgetting to raise next year's payroll estimate after a big audit adjustment. A Texas association that chose not to carry workers' compensation under Labor Code section 406.002 has no workers' compensation audit at all, but its liability policy may still audit receipts or subcontracted work. Our guide on whether an HOA needs workers' compensation insurance covers who has to carry it.

Sources

These guides are general education for HOA boards and residents, not legal, tax, or financial advice. Rules vary by state and by your community's governing documents - check with a professional for your situation.

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