What is the most common reason premium audits are conducted?

What is the most common reason premium audits are conducted?



A. The amount of actual losses are not known at the start of the policy period.
B. Loss control activities during the policy period may reduce the risk of loss.
C. Claim examiners have discovered unacceptable operations during the policy period.
D. The amount of the loss exposure is unknown at the start of the policy period.


Answer: D. Premium audits are conducted because the amount of the loss exposure is unknown at the start of the policy period, and the premium must be adjusted to reflect the actual loss exposure during the period.

Popular posts from this blog

You are riding in Sarah's car when she fails to yield and causes an accident. Which of the following coverages would NOT pay for your injuries?

You are riding in Sarah's car when she fails to yield and causes an accident. Which of the following coverages would NOT pay for your injuries? Answer: Sarah's Collision coverage In the scenario described, if you are riding in Sarah's car when she fails to yield and causes an accident, the coverage that would typically not pay for your injuries would be "Medical Payments Coverage" (MedPay) or "Personal Injury Protection" (PIP), depending on the specific insurance policy and jurisdiction. Here's a breakdown of the relevant coverages and why they may or may not apply: Liability Coverage : This coverage pays for injuries and property damage you cause to others in an accident where you are at fault. Since Sarah is at fault in this scenario, her liability coverage would typically cover injuries to other parties involved in the accident, including you as a passenger in her car. However, it would not cover your injuries. Medical Payments Coverage (MedPay) :
Read more