A Premium Is a Reward, a Payment, and a Price Rise
A premium is the sum paid for insurance, and an amount above the standard price. The Latin word means a reward or prize.
A premium is the regular payment made for an insurance policy, and also any amount added above the usual price. The Latin *praemium* meant a reward or prize, which explains the third sense: *premium* as an adjective means superior, and *at a premium* means scarce and therefore valuable.
- An insurance payment. *The annual premium.*
- An amount above the standard price. *Sold at a premium.*
- Of superior quality. *Premium unleaded.*
- At a premium — scarce and valuable. *Space is at a premium.*
Word forms
| Form | Word | Example |
|---|---|---|
| Noun | premium | A monthly premium. |
| Plural | premiums | Rising premiums. |
| Adjective | premium | Premium seats. |
| Related | excess | A £250 excess. |
| Related | deductible | The American term. |
How it is used in a sentence
- Premiums rose after the claim.Insurance.
- The shares trade at a premium to book value.Finance.
- Storage space is at a premium.Scarce and valuable.
Insurance words
- Premium — what you pay for cover
- Excess / deductible — what you pay before the insurer does
- Claim — a request for payment under the policy
- Underwriting — assessing the risk and setting the price
- No-claims discount — a reduction for a claim-free record
From Latin *praemium*, a reward or prize, from *prae*, before, and *emere*, to take or buy — the same *emere* behind *example* and *redeem*.
Premium or excess?
The premium is what you pay for the policy. The excess is what you pay towards a claim before the insurer contributes.
What does *at a premium* mean?
Scarce, and therefore commanding a higher value. It does not mean expensive in general.