Rating factor

A rating factor is a characteristic of a risk, such as territory or driver class, represented in a rate calculation by a relativity or multiplier applied to the base rate. The factor changes the premium calculated from that base.

Example

For illustration, a $400 base rate multiplied by a territory factor of 0.9 gives $360. A driver-class factor of 1.25 then gives $360 × 1.25 = $450.

Decisimo’s home insurance pricing example shows rating factors multiplying a base rate in a premium calculation.