An insurer may assess a premium surcharge at policy renewal if which condition occurred in the preceding policy year?

• A. No claims occurred in the preceding year
• B. The insured's credit score fell
• C. The amount of claims occurred in the preceding policy year
• D. Market value of property increased

Answer: (C)

Premium surcharges at renewal are meant to reflect the insured’s loss history. When there were claims in the prior policy year, the insurer may raise the renewal premium by applying a surcharge to account for higher risk. The key idea is that the actual claims experience signals how costly the insured may be in the future, so the amount of claims in the preceding year is the trigger for a surcharge.

If there were no claims, a surcharge wouldn’t apply and the premium might stay the same or even be discounted in favorable loss histories. A change in the insured’s credit score is a separate underwriting factor and isn’t this renewal-surcharge trigger, and changes in the market value of the property aren’t used to determine a surcharge based on past claims.