A fee incurred when an insured cancels a policy during a coverage period. The penalty is deducted from any returned premium the insured is owed. For example, an auto policy may require a 10% short rate penalty on unearned premiums if a policy is cancelled by the insured with two weeks remaining during a quarterly coverage period.
Related information about short rate penalty:
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- Can I cancel my policy at any time and will there be a penalty?
Most property and liability policies require what is called a "short rate" penalty when a policyholder requests cancellation, which means that the company retains ...
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If the insurance company, not the policyholder, was the one that terminated the policy, no short rate penalty will be imposed. It is only upon the insured person's ...
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