30. Which of the following statements is/are TRUE about a risk-based premium? CI

Question

30. Which of the following statements is/are TRUE about a risk-based premium? CIRCLE ALL THAT APPLY (2 points) a. The amount a policyholder must pay for a policy based upon the insurance b. The fundamental principle of insurance which results in all policyholders being c. The contractual provision which allows the insurance company to cancel a policy d. company's expectation of the risk of loss that the policy may produce. charged the same price for a particular amount of coverage if the policyholder files a claim for an amount greater than the coverage amount. The percentage of the amount of the claim shared by the policyholder.

Explanation / Answer

The correct answer is option (A)

A risk-based premium is an amount a policyholder pays for a policy based upon the insurance company's expectation ot the risk of loss that the policy may produce. basically the chief governing principle is the fact that the premium rises in line with the risk, that is as risk increases, so does the premium.

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