Minimum Earned Premium
Definition. Minimum Earned Premium is the non-refundable portion of premium that the carrier keeps regardless of cancellation timing — typically 25-50% for specialty classes.
Also known as: Min Earned, ME
Common in specialty / high-risk markets where carrier issuance costs are high. Tow truck and E&S markets frequently impose 25% minimum earned, meaning even cancellation in the first month forfeits 25% of annual premium.
Example
$10K annual tow truck premium with 25% minimum earned. Cancel after 2 months — carrier keeps $2,500 (25%) regardless of pro-rata calculation.
Sources cited
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Reviewed by California-licensed Property & Casualty insurance agent
Jason Wootton (CA License #0I94454). Not insurance advice, an individual recommendation, or a solicitation in any state. Insurance regulations vary by state. For specific coverage decisions, consult a licensed insurance agent in your state.
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