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. |
90,500
-90,000 |
|
| This is the additional amount. |
500
|
||
| 3 | Subtract the smaller limit from the higher limit. |
91,000
-90,000 |
|
| This is the amount difference. |
1,000
|
||
| 4 | Subtract the smaller base premium from the higher base premium. |
233
-229 |
|
| This is the base premium difference. |
4
|
||
| 5 | Determine the additional base premium by the following formula: | ||
|
Additional
Amount
(Step 2) |
x
|
Base Premium Difference = | |
|
Amount
Difference
(Step 3) |
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 factor
|
5,000 | |
| 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
|
