am preparing revenue account so i want to know by expemple method used in calculationg unerned premium reserve
Total Comments: 1
Posted: Fri May 21, 2010 02:02 pm Post Subject:
Annual premium = $1200
Monthly unearned premium = $100 for every month not yet covered
Policy date 1/1/20xx
Actual date 5/20/20xx
# months not yet covered = 7
Unearned premium = $700
Unearned premium and refundable premium are not always the same. You cancel your insurance, you get a "short rate" refund (unearned premium less a cancellation fee). If the insurer cancels you, you get 100% of unearned premium -- a "pro rata" refund.
Posted: Fri May 21, 2010 02:02 pm Post Subject:
Annual premium = $1200
Monthly unearned premium = $100 for every month not yet covered
Policy date 1/1/20xx
Actual date 5/20/20xx
# months not yet covered = 7
Unearned premium = $700
Unearned premium and refundable premium are not always the same. You cancel your insurance, you get a "short rate" refund (unearned premium less a cancellation fee). If the insurer cancels you, you get 100% of unearned premium -- a "pro rata" refund.
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