What is an insurance premium?

An insurance premium is a payment that a person or business makes to an insurer in return for insurance coverage. In Rhode Island, insurance premiums are calculated based on the risk that the company is taking on for insuring you. Insurance companies use information about you or your business such as age, health, driving record, credit history, and many other factors to determine the cost of your insurance. Generally, the more risks you present, the higher your premium. Depending on the type of coverage you purchase, premiums in Rhode Island can range from a few hundred dollars to several thousands of dollars per year. The insurer uses the premiums to pay for claims when an insured event happens. If you fail to make premium payments on time, the insurance company may cancel your coverage.

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