Exposure units

Exposure units are the basic measure used in insurance to quantify the level of risk being covered. They represent the specific amount of risk insured, such as a single car, a house, or a policyholder. For example, in auto insurance, one car equals one exposure unit; in health insurance, one person equals one unit. Using exposure units allows insurers to standardize pricing and assess risk consistently across policies, ensuring premiums accurately reflect the likelihood and potential cost of claims.