Different rating methods are used to more accurately reflect the exposure. For example, a restaurants exposure is more accurately defined by using receipts rather than area, because it better determines the volume of customers (exposure) that comes into the restaurant. However, an apartment building is rated by units or number of apartments, and an office building is rated on the area or square footage of the space. Contractors use payroll because this more accurately reflects their particular exposure.
Written by Clark-Mortenson Insurance
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