The amount you pay to an insurance company to maintain your coverage, typically billed monthly, quarterly, or annually. Premiums are determined by factors such as risk level, coverage amount, deductible, location, and claims history.
Related Terms
Coverage Limit
The maximum amount an insurance company will pay for a covered loss under a policy. Limits can apply per occurrence, per person, or as an aggregate over the policy period. Choosing the right coverage limit is one of the most important decisions when buying insurance.
Deductible
The amount you must pay out of pocket before your insurance coverage kicks in. A higher deductible generally means a lower premium. For example, if you have a $1,000 deductible and file a $5,000 claim, you pay $1,000 and your insurer pays $4,000.
Underwriting
The process insurers use to evaluate the risk of insuring a person or asset and determine the appropriate premium. Underwriters review applications, claims history, credit scores, and other data to decide whether to issue a policy and at what price.