What Does Basic Premium Mean?
A basic premium refers to the portion of the standard premium meant for agent commissions and administrative costs.
Basic Premium
Advertisement
Insuranceopedia Explains Basic Premium
Insurance companies calculate premiums to cover underwriting costs, agent commissions, future claims, and other expenses and potential losses that may result from issuing an insurance policy. The insurer adds the basic premium to the pure premium to arrive at the standard premium.
Advertisement
Share this Term
Related Reading
- Back to the Basics: The Key Components of Your Insurance Policy
- Commercial Insurance Premiums: How Are They Calculated?
- Buying Versus Leasing a Car: Which Is Better?
- From the Experts: Top Tips for Saving Money on Your Insurance
- CLUE Yourself In: How Your Claims History Informs Your Insurance Future
- Hazard Insurance: Is Your Home Protected?
