Insurance premium is determined by each of the following factors except:

• A. Insured's claims history
• B. Method of accounting used by the insured
• C. Market value of the insured asset
• D. Type of coverage selected

Answer: (B)

Verified step by step guidance

1. Understand the concept of insurance premium: Insurance premium is the amount paid by the insured to the insurer for coverage against specific risks. It is influenced by various factors related to the insured and the insured asset.
2. Review the factors listed in the problem: Insured's claims history, market value of the insured asset, type of coverage selected, and method of accounting used by the insured.
3. Analyze each factor: Claims history affects the premium because a history of frequent claims indicates higher risk. Market value of the insured asset impacts the premium as higher-value assets typically require higher coverage. Type of coverage selected influences the premium because more comprehensive coverage generally costs more.
4. Evaluate the 'method of accounting used by the insured': This factor is unrelated to the determination of insurance premiums. Accounting methods pertain to financial reporting and do not affect the risk or value of the insured asset.
5. Conclude that the correct answer is 'method of accounting used by the insured,' as it does not influence the calculation of insurance premiums.