What does the final premium of a CGL policy depend on after the policy has expired?

What does the final premium of a CGL policy depend on after the policy has expired?

• A. Insured's property value
• B. Insured's payroll or sales
• C. Insured's previous year's premiums
• D. Insured's market value

Answer: (B)

The final premium of a Commercial General Liability (CGL) policy is primarily determined by the insured's payroll or sales after the policy has expired. This is because CGL policies are often subject to audits based on exposures that can fluctuate over the policy term, including factors like payroll and sales figures. These exposures are considered as they help assess the actual risk that the insurer underwrote. At the end of the policy period, the insurer may adjust the premium based on the actual figures reported, which will reflect the true scope of the business operations. This process ensures that businesses pay a premium that accurately reflects their risk level for the coverage period. Insureds may also see adjustments based on other factors such as prior claims history or changes in the marketplace, but payroll or sales are direct indicators of the business activity levels that affect overall risk in liability exposures.

The final premium of a Commercial General Liability (CGL) policy is primarily determined by the insured's payroll or sales after the policy has expired. This is because CGL policies are often subject to audits based on exposures that can fluctuate over the policy term, including factors like payroll and sales figures.

These exposures are considered as they help assess the actual risk that the insurer underwrote. At the end of the policy period, the insurer may adjust the premium based on the actual figures reported, which will reflect the true scope of the business operations. This process ensures that businesses pay a premium that accurately reflects their risk level for the coverage period.

Insureds may also see adjustments based on other factors such as prior claims history or changes in the marketplace, but payroll or sales are direct indicators of the business activity levels that affect overall risk in liability exposures.