In Malpractice Insurance, there are usually two types of policies; auditable and non-auditable.  The common perception is that the non-auditable policy is superior to an auditable policy.  However, in my opinion, that is completely determined by the performance of the company, how the policy was set up and negotiated, and how the audit is calculated.  Either policy can be preferential to a company depending on their circumstances. Also, since the policies you purchase are highly customizable, any variation or combination of the below are usually available as well.

Non-Auditable Policy - A non-auditable policy is set up to where your rate is determined by the amount of hours/days you projected for the year.  If you happen to go over those hours/days, the carrier is not able to charge you an additional premium.  The inverse of this is usually true as well.  If you go under those hours/days, the carrier does not return premium either.  Depending on how this is negotiated and structured, it may be better for some companies.  One thing to look out for on some non-auditable policies is they are only non-auditable if you stay in the states and specialties you projected.  But, if you go outside those state or specialties, they will charge an additional premium.

Auditable Policy - An auditable policy is one where you pay a "deposit premium" and then "true-up" with the carrier at the end of the year.  Carriers perform audits in all sorts of ways which can have a significant impact on whether the auditable policy is beneficial or not.  In my personal opinion, unless you know you are going to grow significantly during the year, as long as this method is structured properly, this method is preferred.  However, if not structured properly, it can be very hazardous.

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