Earned Premium
Definition. Earned Premium is the portion of paid annual premium attributable to the time the policy has been in force. Calculated pro-rata across the policy term.
Also known as: EP
$12,000 annual premium, 6 months elapsed = $6,000 earned premium. The remaining $6,000 is Unearned (refundable on cancellation). Important for understanding cancellation refunds and accounting recognition.
Sources cited
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Reviewed by California-licensed Property & Casualty insurance agent
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