What does Hazard Class Pricing mean? Read on to discover the definition & meaning of the term Hazard Class Pricing - to help you better understand the language used in insurance policies.
Hazard Class Pricing
A rating method used by some underwriters to price miscellaneous professional liability (MPL) insurance policies. The method involves grouping miscellaneous professionals into a number of hazard classes and charging the same rate to each risk within the same hazard class. Thus, an insurer might divide its MPL risks into four hazard classes, charging the lowest rate for risks classified within Class I and the highest rate for risks classified within Class IV. For example, if an insurer placed paralegals and collection agencies in the same hazard class, they would both be charged the same rate. Since MPL policies are used to insure more than 50 different types of professionals (a number that is constantly increasing), hazard class pricing is beneficial because it eliminates the need to calculate separate rates for each of these numerous, individual professions.
We hope the you have a better understanding of the meaning of Hazard Class Pricing.