Cancel Method

The cancel method is automatically generated based on the cancel reason. Click on a link below to view an explanation of each cancel method.

Prorate
90% Prorate
Short Rate

Prorate

A method of cancelling a policy where we earn premium based on a flat daily rate.

Explanation: When a policy is cancelled prorate, we earn the cost for the number of days the policy was in force. This is calculated based on a flat daily rate. To calculate the flat daily rate, the total premium is divided by the total number of days in the original policy term, from effective date to expiration date. This rate is then multiplied by the number of days of coverage, from effective date to cancel date.

90% Prorate

A method of cancellation which returns 90% of the prorate unearned premium for the remainder of the policy term, after the effective date of cancellation.

Explanation: When a policy is cancelled the premium is divided into two categories:

1) the cost for the period the policy was active, and
2) the cost associated with the period the policy was not active, but would have been if not for the cancellation.

We earn the cost of the policy for the active period, and 10% of the non-active period. This is earned because we processed the policy with the expectation that it would run for the full term. The policy did not run for the full term because of the cancellation.

Short Rate

A method of canceling a policy where the earning percentage is accelerated and more premium is earned at the beginning of a policy term.

Explanation: When a policy is cancelled the premium is divided into two categories:

1) the cost for the period it was active, and
2)
the cost associated with the period it was not active, but would have been if not for the cancellation.

We earn the cost of the policy for the active period, and a certain percent of the non-active period. This is earned because we processed the policy with the expectation that it would run for the full term. The policy did not run for the full term because of the cancellation.