What is the additional rate charged by an insurer for extra perils under a commercial property insurance policy referred to as?

The additional rate charged by an insurer for extra perils under a commercial property insurance policy is referred to as a loading. This concept is specific to the insurance industry and indicates an increase in the base premium to account for additional risks associated with extended coverage.

Loadings are applied when an insurer assesses that the standard rate does not adequately cover the risks of specific additional perils being insured. These can include events that are not typically included in a standard policy, such as earthquakes or flood coverage. The loading is determined through underwriting processes that evaluate the likelihood and potential financial impact of these additional risks.

Understanding this terminology is essential in the context of commercial property insurance because it helps policyholders appreciate the costs associated with enhancing their coverage beyond the basic terms that a policy offers. Factors like the nature of the business, location, and previous claims history often influence the decision to apply a loading to a policy.