General liability audits can feel overwhelming, especially if you are not sure what to expect. But with the right preparation and awareness of common pitfalls, the audit process can be smooth, efficient, and even beneficial to your business.
At The Bunker Insurance & Risk Management, we help business owners prepare for audits every day. Here are the most common mistakes we see and how to avoid them.
Pitfall 1: Incomplete or Inaccurate Documentation
One of the biggest issues during audits is submitting incomplete or outdated information.
Auditors will request:
- Payroll records
- Financial statements
- Subcontractor certificates
- Job classification reports
Missing or inconsistent records can lead to premium adjustments and unnecessary delays.
Action Step:
Keep all your records organized and up to date. Make sure they accurately reflect your current business operations. Regular reviews with your payroll provider or accountant can help catch errors before audit time.
Pitfall 2: Lack of Communication and Coordination
General liability audits often involve multiple departments, including accounting, human resources, and operations. When these teams are not on the same page, it creates confusion and slows everything down.
Action Step:
Before the audit begins, hold a meeting with all stakeholders. Assign clear responsibilities and make sure everyone understands what information they need to provide. Being prepared shows the auditor that your business is organized and proactive.
Pitfall 3: Ignoring Previous Audit Issues
If your last audit uncovered problems, such as misclassification or poor documentation, it is important to correct them before the next one. Auditors often compare previous reports, and repeated issues raise concern.
Action Step:
Look over your most recent audit report and fix anything that was flagged. Keep a record of the changes you made. Showing improvement builds trust and helps you avoid unnecessary penalties.
Pitfall 4: Misclassification of Employees
Employee classification plays a major role in how your premiums are calculated. If employees are placed in the wrong categories, you may be paying too much or underreporting risk, which creates problems later.
Action Step:
Review all job roles and match each one to the proper general liability class code. If you are unsure, consult with your insurance broker or an HR professional. Getting this right can significantly impact your bottom line.
Pitfall 5: Weak Risk Management Practices
Audits are not only about the numbers. They also give carriers insight into how your business manages risk.
Auditors may evaluate:
- Safety protocols
- Training records
- Incident logs
If there is no formal process in place, it can raise concerns about the likelihood of future claims.
Action Step:
Implement a documented safety program. Train employees regularly and keep logs of any issues or corrective actions. Even simple checklists can go a long way in proving your commitment to risk reduction.
A Smarter Approach to General Liability Audits
When you understand what auditors are looking for, the process becomes much easier. It is not just about compliance. A well-managed audit can help you correct mistakes, reduce premiums, and improve how your business operates.
At The Bunker, we help clients get audit-ready by reviewing classification codes, updating documentation, and improving risk practices.
Let’s Get You Prepared
If you have an upcoming general liability audit or need support cleaning up past mistakes, our team is ready to help.
Book a free strategy session here.
We will guide you through each step and help you turn your next audit into a tool for growth and protection.