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COVID-19 Affect on Your Insurance Audit

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COVID-19 Affect on Your Insurance Audit

Published Tuesday, July 21, 2020 1:00 pm



You’ve been running your business for over four months under the veil of the pandemic.  Likely you’ve made changes to your operations to adjust to the “new normal.”  If part of those changes included furloughing employees, please read on about important implications to your insurance audit.

If you furloughed employees, but continued payroll checks to them, whether through PPP funds or your own coffers, you may exclude that payroll from your liability or workers’ compensation exposure base.   This is good news!  As you know, lower exposure bases mean lower insurance premiums!


Here are the main guidelines of this change:

  • Furloughed employees are defined as employees who are not working for the employer in any capacity and not present at job sites or at the employer’s location.
  • Furloughed employees must be due to COVID-19 related reasons.
  • Holiday, vacation or sick time are not considered furloughed payroll. 
  • Separate payroll records of the furloughed employees and their payroll must be maintained.  Otherwise, all payroll will be included.


Our first advice is to keep separate payroll records.  If you have not done so yet, we encourage you to go back and separate your records.  This will be well worth your time!  Know that each carrier may have slightly different stipulations, so your policy may vary from this in minor ways.

This is just another way that we are supporting you, a local business, as you navigate this unprecedented time.  If you have any questions about your upcoming insurance audit, please let us know.  

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