Earned premium - Definition

The portion of a policy's Premium that applies to the expired portion of the policy is called earned premium. Although insurance premiums are often paid in Advance, insurers typically "earn" the premium at an even Rate throughout the policy term. This can be calculated using the Accounting method or the Exposure Method.

Accounting method of calculating earned premium: If a $2,000 policy has a two-year life span and no claim has been filed six months into the policy, the company will have an earned premium Amount of $500.

Terms near "Earned premium"

Earned surplus
Earnest money
Earning asset
Earning capacity
Earning potential
Earnings adequacy ratio
Earnings allowance
Earnings announcement
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