Pro-Rata Cancellation Calculator
Estimate earned premium and the return premium on a mid-term policy cancellation, with an optional short-rate penalty.
Pro-Rata Cancellation Calculator
Estimate earned premium and the return premium on a mid-term cancellation, with an optional short-rate penalty.
Pro-rata refund
$960.00
73 of 365 days in force
| Metric | Value |
|---|---|
| Earned premium | $240.00 |
| Pro-rata refund | $960.00 |
| Short-rate refund | — |
Simplified estimate. Short-rate tables differ by insurance company and are often not a flat percentage, and minimum earned premium or policy fees may apply. The policy and the insurance company's own calculation determine the actual return premium.
FAQs
- What is the difference between pro-rata and short-rate cancellation?
- A pro-rata cancellation refunds the unearned premium in proportion to the days left in the term. A short-rate cancellation refunds less than that, because the insurance company keeps an additional penalty, usually when the insured asks to cancel.
- How is the short-rate penalty applied in this calculator?
- The penalty percentage is applied to the pro-rata refund. For example, a 10% penalty on a 960 dollar pro-rata refund leaves a short-rate refund of 864 dollars.
- Why does my insurance company's refund differ from this estimate?
- Insurance companies use their own short-rate tables, and policies may include a minimum earned premium, non-refundable fees, or taxes. The policy and the insurance company's calculation are what count.
- Should I use 365 or 366 days for the policy term?
- Use the actual number of days in the policy period. A term that includes February 29 has 366 days, and a short-term policy has fewer.
Related Terms
Pro-Rata Cancellation
Cancellation returning premium in exact proportion to the remaining policy period, with no penalty — standard when the carrier initiates cancellation.
Short-Rate Cancellation
Insured-initiated cancellation where the return premium is calculated at a penalized rate, retaining more than the earned pro-rata share.
Minimum Earned Premium
The floor premium an insurer retains on cancellation regardless of the pro-rata calculation — typically set at 25-30% of the annual premium.