Surprise Audit Notice? You're Not Alone.
If you’re here, you probably just got a notice from your insurance carrier:
“We’re conducting an audit. Please provide the following within 7 days…”
It’s a punch to the gut. You didn’t plan for this. You didn’t know it was coming. And you’re already working overtime to run your business.
This page is built for franchisees who feel blindsided by the audit process—because that’s exactly how it happens. Here’s what to do, what to avoid, and why ignoring it is the most expensive mistake you can make.
THE AUDIT SUPPORT CENTER
WHAT DO I DO?
Let’s be clear: this audit is between you and the carrier.
Your insurance agent—and even Rikor—can’t stop it, delay it, review your subcontractor agreements or get into your payroll provider to handle it for you.
But you can still take action:
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Start Pulling Your Own Records
Carriers typically ask for:-
Payroll summaries
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Certificates of Insurance (COIs) from every subcontractor you paid
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1099s, W-2s, and contractor invoices
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Job descriptions for your team
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Class codes (how your workers are categorized)
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Create a Folder
Save all these docs in one place. Timestamp them. Be ready to upload them directly to the audit portal or email them as requested.
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Review Past Subcontractor Work
If you paid anyone who wasn't an employee, you’ll need to prove they had insurance. Otherwise, the carrier assumes you covered their risk.
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Keep Calm. Stay Proactive.
The audit won’t go away. But the sooner you respond, the fewer surprises you’ll face.
COMMON MISTAKES FRANCHISEES MAKE
We’ve seen audits go sideways because of avoidable errors. Here's what to watch for:
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No COIs for Subcontractors
If you didn’t collect proof of insurance from someone you paid, the carrier will treat them like your employee—and bill you as if they were payroll.
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Wrong Class Codes
If you mislabel employees (e.g., putting a technician under a clerical code), the audit will correct it—and charge you retroactively.
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Throwing Away Old Documents
Just because the job is done doesn’t mean the recordkeeping is. COIs and payroll docs should be saved for at least 2 years.
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Ignoring the Audit Notice
The biggest mistake? Doing nothing. When you don’t respond, the carrier assigns an estimated payroll—usually much higher than reality.
CAN I DISPUTE THE OUTCOME?
Yes—but only if you’re organized.
If you think the carrier misclassified someone or overcharged you for subcontractor work, you’ll need to:
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Submit a formal dispute request directly to the carrier
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Include proof (COIs, timecards, contracts, job descriptions)
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Follow their deadline for filing a dispute—usually 30 days
Disputes can succeed. But only if you have airtight documentation.
If you ignore the audit, here's what happens:
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The carrier estimates your payroll using industry averages
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They send you a bill—often thousands higher than your actual labor costs
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You’re legally obligated to pay it
There’s no appeal once the audit is closed. Even if it’s wrong. The time to act is now.
CAN I IGNORE THIS?
No. And we wish we could say otherwise. Even if you're closed for business.
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Remind you of what to collect next time you hire a subcontractor
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Teach you best practices to protect your business year-round
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Help you prepare for future audits with smarter recordkeeping
This isn’t just about getting through this audit.
It’s about making sure the next one doesn’t hurt so bad
If you need help with insurance planning—not just reacting to surprises—email your Rikor franchise consultant. We’re here to help you protect your business, not just insure it.
