Claims Adjuster Academy Chapter 3 Demo

EXAMPLE: AN INSURED THAT PURCHASES $60,000 OF INSURANCE AT A RATE OF $2 PER $1,000 WOULD PAY A PREMIUM OF $120 (2 X 60 = 120). Merit Rating- Typically, merit rating starts with class or manual rates, which are then modified to reflect the unique characteristics of the risks that are not reflected in the manual rate. Experience Rating- Experience rating is a form of merit rating that modifies the manual premium based on the insured’s loss experience over some period of time. Retrospective Rating- Other types of merit rating include retrospective rating, which bases the insured’s premium on losses incurred during the policy period. Scheduled Rating- Scheduled rating applies a system of debits or credits to reflect characteristics of a particular insured. Hazards A hazard is anything that increases the seriousness of a loss or the likelihood that a loss will occur due to a peril. Risk A risk is the uncertain potential for loss. Perils are things that cause losses. Hazards are catalysts that trigger or advance perils. Physical hazard Physical hazards arise from material, structural, or operational features of a risk situation. Seriously worn automobile tires would be a physical hazard. Moral hazard Moral hazards arise from a person’s habits which increase the possibility of loss. Dishonesty, such as intentionally setting a fire in order to collect the insurance, is an example of a moral hazard. Morale hazard Morale hazards arise from human carelessness or irresponsibility. Negligence 3.2 FREQUENTLY USED TERMS AND DEFINITIONS