The amount a contractor pays to an insurance company for coverage is called the __.

The amount a contractor pays to an insurance company for coverage is called the __.

• A. Deductible
• B. Policy
• C. Coverage cost
• D. Premium

Answer: (D)

In insurance, the amount you pay to keep the coverage active is called the premium. This payment funds the insurer for taking on the risk and keeps the policy in force, typically on a monthly, quarterly, or annual schedule. It’s separate from what you pay when you file a claim. The deductible is the portion you must cover out of pocket before the insurer pays, and the policy is the written agreement that outlines what’s covered, the limits, and the exclusions. Some people might refer to a general “coverage cost,” but the standard term used in contracts and exams is premium.

In insurance, the amount you pay to keep the coverage active is called the premium. This payment funds the insurer for taking on the risk and keeps the policy in force, typically on a monthly, quarterly, or annual schedule. It’s separate from what you pay when you file a claim. The deductible is the portion you must cover out of pocket before the insurer pays, and the policy is the written agreement that outlines what’s covered, the limits, and the exclusions. Some people might refer to a general “coverage cost,” but the standard term used in contracts and exams is premium.