Insurance Terms Defined: Exposure Units

Exposure Units: A measure of the loss exposure assumed by the insurer, used in pricing insurance.

As you know from the definition of loss exposure, your auto insurance company will try to determine how much to charge you for insurance based on a set of criteria you have entered.  For every loss exposure assumed by your auto insurance company there is counted an exposure unit.  The more exposure units assumed the more the premium will go up for the insured.

Exposure units help an insurance company define why one individual may be more at risk to cause or be involved in an accident than another.  It is a tangible piece of evidence to provide to those that think the pricing of insurance is unfair and completely arbitrary.