Certy
Start tracking

Workers’ comp audit calculator: the cost of uninsured subs

Paid a sub who didn’t have a valid certificate on file? Your workers’ comp audit may count those payments as your payroll. Enter your subs and rate to estimate what it could add.

Free · No signup · Runs in your browser

Payments to subcontractors this policy period

SubcontractorPaidValid COI on file?Added premium
$0
$7,600
$1,920

Estimated added premium at audit

$9,520

$119,000 paid to subs without a valid certificate × 100% labor × $8.00 per $100 × 1.00 mod

A valid COI showing workers’ comp for the whole period you paid them is usually what keeps a sub’s payments off your audit. One expired certificate can be enough to have them counted.

How uninsured subs end up on your workers’ comp bill

Your workers’ comp premium is based on payroll. At the end of the policy period, the insurer audits what you actually paid — including what you paid subcontractors. When a sub can’t be shown to have carried its own workers’ comp for that whole period, many carriers treat those payments as if they were your own payroll and charge premium on them.

The formula

Workers’ comp premium is generally calculated as:

payroll ÷ 100 × class rate × experience mod

So $100,000 paid to an uninsured sub, at a class rate of $8.00 per $100 and a mod of 1.00, could add about $8,000 of premium. Real bills also include state assessments, minimums and carrier-specific rules — use this as an estimate, not a quote.

How to stay off the hook

  1. Require workers’ comp (or a valid state exemption) in every subcontract.
  2. Collect a certificate of insurance before the sub starts work.
  3. Check the workers’ comp row: policy present, dates cover the work, employers’ liability limits meet your contract. The free COI checker does this in seconds.
  4. Get a new certificate every time a policy renews — expired ones don’t count.
  5. Keep certificates organized by sub and date so you can hand them to the auditor.

Step 4 is where spreadsheets fail. Policies renew on different dates for every sub, and one missed renewal is all it takes.

FAQ

Common questions.

  1. 01

    What is a workers’ comp audit?

    Workers’ compensation premiums are first estimated, then trued up after the policy period ends. The insurer’s auditor reviews your actual payroll — and your payments to subcontractors — and bills (or refunds) the difference.

  2. 02

    Why do uninsured subcontractors raise my workers’ comp premium?

    If a sub didn’t carry its own workers’ comp, your policy may be on the hook for its workers, depending on your state. Insurers commonly treat payments to subs without proof of coverage as your payroll at audit and charge premium on them.

  3. 03

    What does the auditor want to see?

    Usually a certificate of insurance for each subcontractor showing workers’ compensation in force for the entire time you paid them, plus records of what you paid. Requirements vary by carrier and state.

  4. 04

    Can I fix it after the audit?

    Sometimes you can submit missing certificates during an audit dispute, but certificates that don’t cover the right dates often won’t help. It’s far easier to collect and track valid COIs before the sub starts and as their policies renew.

  5. 05

    How accurate is this calculator?

    It’s an estimate using the standard premium formula (payroll ÷ 100 × rate × experience mod). Your carrier’s rules, minimums, state assessments and how it treats labor vs materials will change the real number.

More free tools

Free ACORD 25 checker

Upload a COI — AI reads it and tells you if it meets your requirements.

Waiver of subrogation explainer

Toggle the waiver on and off and watch who pays when a sub’s worker gets hurt.

Additional insured vs certificate holder

Four questions to identify documents and coverage terms to confirm with your broker.

Never get billed for an uninsured sub again.

Certy collects every sub’s COI, checks workers’ comp is in force, and chases renewals before they lapse. 30-day money-back guarantee.

Track my subs’ COIs

These free tools are general information, not legal or insurance advice. Requirements and rules vary by contract, carrier and state — confirm with your broker or attorney.