Cancellation Methods
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Flat
The cancellation of an insurance policy or bond as of its effective date, before the insurer has assumed liability. This requires the return of paid premium in full since the insured has never been covered under the policy.
Short term
A type of insurance policy cancellation that serves as a disincentive for the named insured to cancel the policy before its normal expiration date. the insurer is entitled to retain a greater percentage of unearned premium (UEP) than would otherwise apply with pro rata cancellation
Pro-rata
When policyholders cancel a policy, they are entitled to the unearned portion of the premium for the unused period of the policy.
