1. What is the Insurance Cancellation Refund Calculation?

The Insurance Cancellation Refund Calculation determines the amount to be refunded when an insurance policy is canceled before its expiration date, using the wheel method (pro-rata calculation based on remaining days).

2. How Does the Calculator Work?

The calculator uses the wheel method formula:

Where:

• \( Premium \) — Original insurance premium paid (USD)
• \( Remaining\ Days \) — Days remaining in policy period when canceled
• \( Total\ Days \) — Total days in original policy period

Explanation: The calculation determines the unused portion of the premium by comparing remaining days to total days in the policy period.

3. Importance of Accurate Refund Calculation

Details: Proper refund calculation ensures fair treatment of both insurers and policyholders, prevents disputes, and maintains regulatory compliance in insurance operations.

4. Using the Calculator

Tips: Enter the original premium amount in USD, remaining days until cancellation, and total days in policy period. All values must be valid (premium ≥ 0, remaining days ≥ 0, total days > 0, remaining days ≤ total days).

5. Frequently Asked Questions (FAQ)

Q1: What is the wheel method in insurance?
A: The wheel method is a pro-rata calculation that determines refunds based on the proportion of unused coverage time.

Q2: Are there other refund calculation methods?
A: Yes, some policies use short-rate methods that include cancellation fees, but wheel method is most common for pro-rata refunds.

Q3: Does this apply to all insurance types?
A: Most property and casualty policies use this method, but life insurance may have different surrender value calculations.

Q4: What if my policy has minimum earned premium?
A: If the calculated refund is below the minimum earned premium specified in your policy, you may receive less than the calculated amount.

Q5: Are taxes and fees refunded?
A: This calculator shows premium refund only. Tax and fee refunds depend on local regulations and policy terms.