Washington State Insurance Practice Exam

Which rating method uses a base rate and applies charges and credits to determine the final rate?

1. Class Rating

2. Experience Rating

3. Judgment Rating

4. Schedule Rating

The correct answer is: Schedule Rating

Schedule rating is the rating method that uses a base rate and applies charges and credits to determine the final rate. This method allows for adjustments to the base rate based on specific characteristics of the insured that are not reflected in the standard rates. These adjustments could include factors such as the insured's claims history, safety measures in place, and other relevant underwriting considerations. Class Rating typically applies standard rates based on predefined characteristics of the insured, without much flexibility for individualized adjustments. Experience Rating involves adjusting the premium based on the insured's historical loss experience. Judgment Rating relies on the underwriter's expertise and discretion to determine the final rate, often used when standard rating methods are not applicable or sufficient.