Unearned Premium Insurance
Definition of "Unearned premium insurance"
Coverage for loss of unearned premium if insured property is destroyed before the end of a policy period. The policyholder pays in advance for insurance, but the insurer does not earn the premium until coverage is provided. For example, if a policy period is one year, one-twelfth of the premium is earned each month. After six months, one-half of the premium is still unearned and belongs to the policyholder if the policy is canceled. If the property is destroyed in the second month and the insurer pays the claim, the policyholder would have nothing left to insure. Unearned premium insurance reimburses the insured for the part of the premium paid up front that is no longer needed for insurance coverage.
Popular Insurance Terms
Payment of premiums and benefits as they come due. In pension plans, known as the "pay as you go basis." The plan depends on new employees coming into the work force so that their ...
Independent agency supported by the insurance industry that tests a variety of materials, products, and devices, such as appliances and electrical equipment, to assure that they meet safety ...
Reductions in the value of property due to physical damage or destruction. ...
Assumption of liability through contractual agreement by one party, thereby eliminating liability on the part of another party. An example is a railroad sidetrack agreement with a ...
Type of employee savings plan under which an employee may contribute up to a specified percentage of the salary on an after-tax basis and the employer matches the employee's contribution up ...
Risk management technique for identifying risks and taking steps to minimize losses. ...
Means of paying the cost of benefits of pension plan participants including retirement, death, and disability. ...
Limit allowed by law on employee salary reduction plans. Many pension plans, as well as the popular 401 (k) plan, allow employees to set aside pre-tax dollars in a company-sponsored ...
Type of insurance that provides a single aggregate limit of coverage within the insurance policy terms, thereby limiting the insurance company's liability for a risk transferred to it. The ...
Have a question or comment?
We're here to help.