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Pro-Rata Cancellation Calculator

Calculate pro-rata return premium and earned premium when a policy cancels mid-term.

How the pro-rata cancellation calculator works

A pro-rata cancellation returns exactly the unearned portion of the premium — the share of the term not yet used. It applies when the carrier cancels and, on many policies, on flat rewrites and rewrites to the same carrier.

Formula

Return premium = Premium × Days remaining ÷ Days in term.

How to use it

1. Enter the full-term premium.
2. Enter the effective, expiration and cancellation dates.
3. Read the earned and unearned premium.

Worked example

A $6,500 annual policy cancelled after 152 days returns $6,500 × 213/365 = $3,793.15.

Frequently asked questions

When is a cancellation pro-rata rather than short-rate?

Carrier-initiated cancellations are almost always pro-rata. Insured-requested cancellations may be short-rate if the policy says so.

Do fees come back?

Policy fees are usually fully earned at inception and are not returned.

Guides

• Pro-Rata vs Short-Rate Cancellation: How Return Premium Is Calculated
• Earned vs Written Premium: What Each One Tells You

Related calculators

• Short-Rate Cancellation Calculator — Calculate short-rate return premium using a penalty percentage or the traditional short-rate table, compared with pro-rata.
• Minimum Earned Premium Calculator — Calculate the return premium on cancellation when a minimum earned premium (MEP) applies.
• Earned Premium Calculator — Calculate earned and unearned premium for any as-of date — for reserves, cancellations and reporting.