Washington State Insurance Practice Exam

In which type of rating does the insured's own past loss experience determine the final premium?

1. Class Rating

2. Experience Rating

3. Judgment Rating

4. Schedule Rating

The correct answer is: Experience Rating

In experience rating, the insured's own past loss experience is used to determine the final premium. This type of rating system takes into account the specific history of losses for the individual insured, providing a more personalized premium based on their unique risk profile. Class rating, on the other hand, sets premiums based on broad categories or classes of risks rather than individual past loss experience. Judgment rating involves the underwriter's judgment in setting the premium, considering various factors beyond just past losses. Schedule rating allows for modifications to the final premium based on individual characteristics of the risk, but it does not specifically rely on the insured's own past loss experience to determine the premium.