When is an audit waived?

An audit is typically waived for small accounts due to the lower level of risk and complexity associated with them. Small accounts generally involve minimal exposure and less intricate operations, making extensive auditing unnecessary. Insurance providers often seek to streamline their processes by waiving audits on these accounts, allowing them to allocate resources more efficiently. This approach reduces the administrative burden on both the insurer and the insured for accounts that are less likely to present significant issues.

In contrast, large accounts, high-risk businesses, and first-time clients are more likely to undergo audits because they represent greater exposure, more intricate operational structures, or the need to establish a comprehensive understanding of a new client’s risk profile. Audits in these situations are vital for ensuring appropriate coverage and assessing potential liabilities.