Unearned Premium is the portion of an insurance payment that corresponds to the time remaining on a policy that hasn’t “passed” yet. Since most homeowners pay for a full year upfront, the insurance company “earns” that money day-by-day. If you cancel your policy exactly halfway through the year, the remaining 50% is considered unearned. Legally, the carrier must return this money to you, though the Insurance Cop warns that some carriers may subtract a “Short-Rate” penalty first.
Unearned Premium
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