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Minimum Earned Premium Calculator

Calculate the return premium on cancellation when a minimum earned premium (MEP) applies.

How the minimum earned premium calculator works

Many E&S and specialty policies include a minimum earned premium — a percentage of the premium the carrier keeps no matter how early the policy cancels.

Formula

Earned = max( Premium × Days in force ÷ Term days , Premium × MEP % ). Return premium = Premium − Earned.

How to use it

1. Enter the premium and MEP percentage.
2. Enter the policy dates and cancellation date.
3. Compare pro-rata earned premium with the MEP.

Worked example

An $8,000 policy with a 25% MEP cancelled after two months keeps $2,000 (the MEP) rather than about $1,300 pro-rata, and returns $6,000.

Frequently asked questions

Is MEP common?

It is standard on many E&S property, GL and event policies, and is usually 25% to 35%.

Does MEP apply if the carrier cancels?

Usually not — check the policy’s cancellation condition.

Guides

• Pro-Rata vs Short-Rate Cancellation: How Return Premium Is Calculated

Related calculators

• Pro-Rata Cancellation Calculator — Calculate pro-rata return premium and earned premium when a policy cancels mid-term.
• Short-Rate Cancellation Calculator — Calculate short-rate return premium using a penalty percentage or the traditional short-rate table, compared with pro-rata.
• Earned Premium Calculator — Calculate earned and unearned premium for any as-of date — for reserves, cancellations and reporting.