hazard class pricing
A rating method used by some underwriters to price miscellaneous professional
liability (MPL) insurance policies. The method involves grouping miscellaneous
professionals into a number of hazard classes and charging the same rate to
each risk within the same hazard class. Thus, an insurer might divide its MPL
risks into four hazard classes, charging the lowest rate for risks classified
within Class I and the highest rate for risks classified within Class IV. For
example, if an insurer placed paralegals and collection agencies in the same
hazard class, they would both be charged the same rate. Since miscellaneous
professional liability policies are used to insure more than 50 different types
of professionals (a number that is constantly increasing), hazard class pricing
is beneficial because it eliminates the need to calculate separate rates for
each of these numerous, individual professions.
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