The amount of money a policyholder pays to an insurance company for coverage, usually on a monthly, quarterly, or annual basis. Premiums are calculated based on factors such as the level of risk, type and amount of coverage, deductible, and the policyholder's history. In Canada, auto insurance premiums vary significantly by province.
Understanding premium is important for Canadian insurance consumers because it directly affects how your coverage works and what you can expect when you need to use your insurance. This is a foundational insurance concept that applies across multiple types of coverage and is worth understanding regardless of what insurance you carry.
If you have questions about how premium applies to your specific insurance needs, speaking with a licensed insurance broker can help clarify your options and ensure you have the right level of protection.
Your auto insurance premium is $150 per month. By increasing your deductible from $500 to $1,000, you could reduce your monthly premium to approximately $120.
The amount of money a policyholder must pay out of pocket before the insurance company begins to pay on a claim. Higher deductibles generally result in lower premiums. For example, if you have a $1,000 deductible and file a $5,000 claim, you pay the first $1,000 and the insurer covers the remaining $4,000.
The process by which an insurance company evaluates the risk of insuring a person or property and determines the terms and premium for the policy. Underwriters assess factors such as age, health, driving record, property condition, location, and claims history. The underwriting process ensures that premiums accurately reflect the level of risk.
A professional who uses mathematics, statistics, and financial theory to assess risk and calculate insurance premiums. Actuaries analyze historical data and predictive models to determine the likelihood of future events such as accidents, natural disasters, or death. Their work is essential to setting fair and sustainable insurance rates.
A licensed insurance broker can explain how premium applies to your specific situation and help you find the right coverage.
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