Question

    What is the significance of "rate on line" in insurance

    pricing?
    A It is the percentage of premium charged for each unit of exposure. Correct Answer Incorrect Answer
    B It is the premium charged per unit of coverage. Correct Answer Incorrect Answer
    C It is the percentage of premium charged per unit of time. Correct Answer Incorrect Answer
    D It is the premium charged per unit of claim. Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    The correct answer is B. It is the premium charged per unit of coverage. The rate on line represents the premium charged for each unit of coverage, such as $100,000 of property coverage.

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