Short Period Rate (old short rate) Ī penalty method of calculating the return premium often used when the policy is canceled at the insured's request. ![]() This factor is multiplied by the written premium to arrive with the return premium. Pro rata Ī non-penalty method of calculating the return premium of a canceled policy.Ī return premium factor is calculated by taking the number of days remaining in the policy period divided by the number of total days of the policy. Cancellation methods are typically calculated using an online wheel calculator. Three different calculation methods are commonly used. This has the effect of ending the policy coverage on the date of the policy cancellation.
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