Unearned Premium
/ˌʌnˈɜrnɪd ˈprɛmɪəm/
Definitions
- (n.) The portion of an insurance premium corresponding to the unexpired term of the policy, refundable upon cancellation.
The insurer returned the unearned premium after the policyholder canceled the coverage early.
Forms
- unearned premium
Related terms
See also
Commentary
Unearned premium is calculated pro rata and reflects insurer's obligation to return prepaid but unused coverage; precise calculation is important in policy cancellation and reserve accounting.
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