|
SECTION 30 - BASE
PREMIUM
RULE 30.1 - BASE
PREMIUM COMPUTATION
This rule is provided
as an explanation to develop base premiums for situations requiring additional
calculations or for limits other than those shown on the Rate Pages.
The figures shown in
the following interpolation examples are for illustration only and are
not the rates shown on the Rate Pages.
EXAMPLE I: $90,500
policy limit (nearest limits are $90,000 and $91,000)
|
Step
|
Procedure |
Example
Premiums
|
|
1
|
Find
the base premiums for the limits listed above. |
$90,000
= $229
91,000 = 233
|
|
2
|
Subtract the smaller
limit from the desired limit.
This is the additional
amount.
|
90,500
-90,000
500
|
|
3
|
Subtract the smaller
limit from the desired limit.
This is the additional
amount.
|
91,000
-90,000
1,000
|
|
4
|
Subtract the smaller
base premium from the higher base premium.
This is the base
premium difference.
|
233
-229
4
|
| 5
|
Determine
the additional base premium by the following formula: |
|
| |
Additional
Amount
(Step 2)
Amount
Difference
(Step 3)
|
|
|
|
X
Base Premium Difference = Additional Base Premium
(Step 4) |
| |
| |
Example: 500 X 4 = $2
1,000
|
|
|
6
|
Add
additional base premium to the smaller base premium. Round the result
to the nearest whole dollar.
|
229
+
2
231
|
| |
EXAMPLE II: $205,000
policy limit
If the desired limit
of liability is more than the highest limit shown, determine the base
premium as follows:
|
Step
|
Procedure |
Example
Premiums
|
|
1
|
Find the base
premium for the highest limit shown in the rate page. ($200,000)
|
$745
|
|
2
|
Find the factor
for each additional $5,000 shown in the rate page.
|
.025
|
|
3
|
Subtract the highest
limit shown from the desired limit. This is the additional amount.
|
|
205,000
desired
|
|
200,000
highest shown
|
|
5,000
|
|
4
|
Determine the
factor for the additional amount
by the following
formula. This is the adjustment
factor.
|
|
| |
Additional
Amount x Each Additional
|
5,000
x .025 = .0250
5,000
|
| |
5,000
|
$5,000
factor |
| 5 |
Multiply the base
premium for the highest limit shown
by the adjustment factor. This is the additional
premium.
|
745
x .025 = $18.63
|
| 6 |
Add
the additional premium to the base premium for the highest limit shown.
Round the results to the nearest whole dollar. |
745.00
18.63
$
763.63 = $764
|
|
