The unit of measurement used in property and casualty insurance pricing is called the
A) unit rate.
B) premium.
C) exposure unit.
D) experience unit.

Question

Quizplus · Accepted Answer

The unit of measurement used in property and casualty insurance pricing is the exposure unit, which is the basis for calculating premiums. An exposure unit represents the unit of risk used to determine the premium charged for that risk. Examples of exposure units include the number of vehicles insured in a policy, the square footage of property insured, or the number of employees covered by a workers' compensation policy. Choice A is incorrect because a unit rate is a rate per unit of measurement, not a unit of measurement itself. Choice B is incorrect because a premium is the amount paid for insurance coverage, not a unit of measurement. Choice D is incorrect because an experience unit is a measure of an individual's exposure to risk or loss, not a unit of measurement used in pricing.

The Unit of Measurement Used in Property and Casualty Insurance