---
title: "What Is a Commission True-Up? — Lapidar"
url: https://getlapidar.com/glossary/commission-true-up/
description: "Commission true-up: settling commission paid on an estimate against the final figure, such as audited premium. Worked example."
last_modified: "Wed, 14 Oct 2026 08:43:11 GMT"
source: getlapidar.com (HTML converted to Markdown at the edge)
---

Glossary · Insurance agency commissions

# Commission true-up

A commission true-up is an adjustment that replaces commission paid or booked on an estimate with the commission due on the final figure, such as audited premium, a corrected rate or a year-end bonus calculation, and settles the difference either way.

By Lapidar, the team building it · October 14, 2026 · Also called true up; commission adjustment; reconciliation adjustment

## What it means

Estimates are everywhere in an agency’s commission: deposit premium on an auditable policy, an expected rate before the schedule is confirmed, an accrued profit-sharing figure before the carrier’s worksheet arrives. A true-up is the moment the estimate meets the final number. The IRS describes the same mechanism for income in [Publication 538](https://www.irs.gov/publications/p538): “If you include a reasonably estimated amount in gross income and later determine the exact amount is different, take the difference into account in the tax year you make that determination.”

How it works: the carrier, or your own books, compares what was paid on the estimate with what is due on the final figure and posts the difference. On a [premium audit](https://getlapidar.com/glossary/audit-premium/) it is additional or return premium with commission at the policy’s rate; on a [contingent commission](https://getlapidar.com/glossary/contingent-commission/) it may be a final payment after an advance.

On a checked statement

The sample report shows how a statement check marks lines like this one: missing, underpaid, charged back or paid twice, each set against the expected amount. Example data, no account needed. [See how a statement check flags this](https://getlapidar.com/sample-report/?from=glossary-commission-true-up#sr-find).

## How it shows on a commission statement

A true-up line usually carries a code such as AUD, ADJ or a description like “prior period adjustment,” and may refer to a policy term that ended months ago. The check: the true-up should equal the commission on the final figure minus the commission already paid, at the rate originally applied.

### In reconciliation, and what Lapidar does

Lapidar does not track estimates over time. It checks each statement line against your book premium times the schedule rate for that carrier, line and new or renewal business. A true-up line on a policy is added to that policy’s payments on the statement and compared with what your book says is due, so update the book premium after an audit. Negative true-ups are treated as chargebacks and paired with an earlier payment where one exists.

## Example

Audit true-up on a general liability policy · EX-80533Example data

**Deposit premium at issue**
$6,000.00

**Commission paid at issue, 12%**
$720.00

**Audited premium**
$7,400.00

**Commission due on audited premium, 12%**
$888.00

**True-up owed to the agency**
$168.00

Example data. Commission rates on this page are invented; your agency agreement and commission schedule set the real ones.

## Common mistakes to check

- Not updating the policy premium after an audit, so the true-up looks like an overpayment.
- Accepting a true-up at a different rate than the original commission.
- Booking an estimated bonus as final and never comparing it with the carrier’s worksheet.

## Questions

### What does true-up mean in insurance commission?

Settling the difference between commission paid on an estimate and commission due on the final figure, such as audited premium or a final bonus calculation.

### Can a true-up reduce my commission?

Yes. If the final premium is lower than the estimate, the true-up is negative and works like a chargeback at the original rate.

### How is a commission true-up calculated?

Commission on the final figure minus commission already paid. In the example, 12% of $7,400.00 is $888.00; $720.00 was paid, so $168.00 is owed.

## Sources

- Internal Revenue Service, [Publication 538, Accounting Periods and Methods](https://www.irs.gov/publications/p538). Retrieved October 14, 2026.

Lapidar is [commission reconciliation software for independent insurance agencies](https://getlapidar.com/), in its founding pilot. Related: [audit premium](https://getlapidar.com/glossary/audit-premium/).

In this entry

1. [What it means](https://getlapidar.com/glossary/commission-true-up/#meaning)
2. [On a commission statement](https://getlapidar.com/glossary/commission-true-up/#on-statement)
3. [Example](https://getlapidar.com/glossary/commission-true-up/#example)
4. [Common mistakes](https://getlapidar.com/glossary/commission-true-up/#mistakes)
5. [Questions](https://getlapidar.com/glossary/commission-true-up/#faq)
6. [Sources](https://getlapidar.com/glossary/commission-true-up/#sources)

All 95 terms, from account current to written premium.

[Glossary A–Z](https://getlapidar.com/glossary/)

Check each adjustment against your book premium and schedule.

[See a sample report](https://getlapidar.com/sample-report/?from=glossary-commission-true-up)

## Reconciling statements is the hard part.

Check each adjustment against your book premium and schedule. [See a sample report](https://getlapidar.com/sample-report/?from=glossary-commission-true-up), or read [how the founding pilot works](https://getlapidar.com/pilot/).

[Open an account — founding pilot](https://app.getlapidar.com/signup?from=glossary-commission-true-up)

[See how a statement check flags this](https://getlapidar.com/sample-report/?from=glossary-commission-true-up#sr-find)