guaranteed cost
Premiums charged on a prospective basis without adjustment for loss experience
during the policy period. A rate is agreed on at the inception of the policy
and is multiplied by the appropriate exposure base (e.g., sales, payroll, number
of vehicles, or square footage) to yield the premium. With respect to auditable
lines of coverage (e.g., workers compensation and general liability), only a
change in the exposure base during the policy period will cause the premium
to vary. In other words, if the actual exposure base at the end of the policy
period is more or less than the estimate used at policy inception, the premium
will be adjusted accordingly. Loss experience during the policy period does
not affect the premium for that period.
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IWC XI.H;
RF III.B