Insurance Concept of the Week: Merit Rates

Each week we will post and define an industry term or concept for our readers.

To continue our discussion on rates, a merit rate considers the characteristics of a particular risk, and depending on those characteristics a premium can be increased or decreased. Merit rates take into consideration a person's loss history, as well as steps he/she has taken to prevent loss, such as installing a smoke detector in a home.

Check out our previous posts on: (1) what is a rate (link here), and (2) manual/class rates (link here).