Washington State Insurance Practice Exam

Which of these factors is involved in loss valuation?

1. Deductible amounts

2. Geographical location

3. Premium charged

4. Type of hazards

The correct answer is: Premium charged

In loss valuation, the factor involved is the premium charged. Premiums are the amount paid by the insured to the insurance company in exchange for coverage. The premium amount reflects the insurer's assessment of the risk involved and helps determine the value of the potential loss. Therefore, premium charged is directly related to loss valuation. While deductible amounts, geographical location, and type of hazards are important factors in insurance, they are not directly involved in loss valuation. Deductible amounts determine the portion of a claim that the insured is responsible for paying before the insurance coverage kicks in. Geographical location and type of hazards are factors that affect the risk level associated with insuring a property or individual but do not directly determine loss valuation in the same way that the premium charged does.