Idaho Property and Casualty Practice Exam 2025 - Free Practice Questions and Study Guide

Question: 1 / 400

Which of the following best describes an insurance premium?

The amount paid by the insurer for claims

The amount a policyholder pays for insurance coverage

The insurance premium is best described as the amount a policyholder pays for insurance coverage. This payment is typically made on a regular basis, such as monthly or annually, and is in exchange for the insurer's promise to provide financial protection against specified risks. The premium amount can vary based on factors such as the type of coverage, the insured's risk profile, and additional policy features.

By understanding the role of the premium in an insurance policy, one can see that it is fundamental to the contractual relationship between the insurer and the policyholder. The premium is not a cost incurred by the insurer for claims or administrative purposes; rather, it is a direct charge that the policyholder agrees to in order to receive coverage.

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The total claims paid in a year

The administrative costs incurred by the insurer

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