Which of the following are among the most common methods of how the premises premium is computed?

• A. Sales
• B. Number of admissions
• C. Area of the premises
• D. All of the above

Answer: (D)

Premises premium is tied to exposure units that reflect how much risk the insurer takes on based on activity, occupancy, and size. Sales volume is a common base because higher turnover often means more stock in use and greater exposure to loss. The number of admissions (foot traffic) captures how many people are on the premises, which drives liability and incident risk. The area of the premises, or the square footage, reflects the physical size of the risk—more space typically means more property to insure and potentially more fire and damage exposure. Because each of these bases measures a different facet of risk, insurers frequently use one or a combination of them to set the premium. That’s why all of the above is considered a common method.