What does a Merit Rating plan generally adjust?

A Merit Rating plan is specifically designed to adjust class rates based on the individual loss experiences of insureds. This means that the premiums for a specific policyholder are influenced by that individual's claims history and loss record. If the insured has a favorable loss history, they may receive discounts or lower premiums. Conversely, if they have a poor claims history, their premiums may be increased. This plan encourages policyholders to maintain a good risk profile by promoting safer practices, as their financial outcome on insurance premiums is directly affected by their past behavior related to claims.

While factors such as coverage limits, deductibles, and premiums based on risk profiles are important aspects of insurance calculations, the Merit Rating plan specifically emphasizes the historical claims experience of the insured, making option C the most accurate description of what the plan adjusts. The focus on individual loss experiences differentiates it from adjustments based solely on general market trends or broader class rates not directly tied to an individual's behavior.