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Quotes of the day:
Truth may be stretched, but cannot be broken, and always gets above falsehood, as does oil above water.
Unearned premium is the premium corresponding to the time period remaining on an insurance policy. These are proportionate to the unexpired portion of the insurance and appear as a liability on the insurer’s balance sheet since they would be paid back upon cancellation of the policy. This way, at the end of the first year of a fully prepaid five-year insurance policy with insurance premiums of $2,000 per year, the insurer has earned a premium of $2,000 and has an unearned premium of $8,000.
What is Unearned premium?
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