The price of insurance for each exposure unit is called the:

The price of insurance for each exposure unit is referred to as the rate. The rate is a foundational concept in insurance, as it represents the cost per unit of insurance coverage. It is calculated based on various factors, including risk assessment, underwriting criteria, and overall market conditions. Essentially, the rate helps insurers determine how much they should charge policyholders for a specific amount of coverage based on the risk associated with that coverage.

Understanding the term "rate" is crucial because it provides insight into how insurance companies assess risk and set the pricing structure for their policies. The rate is then multiplied by the number of exposure units (such as the amount of coverage or the number of insured items) to arrive at the total premium that the insured will pay.

This concept is distinct from other terms related to insurance pricing. The premium is the total amount a policyholder pays for their insurance coverage, while an adjustment factor may be used to modify the rate based on unique circumstances or risks. A package price refers to a bundled price for multiple types of coverage but does not specifically denote the cost per exposure unit. Understanding these distinctions helps clarify the insurance pricing structure and its application in real-world scenarios.