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Insurance Premium Proration Calculator

Work out a fair premium for partial coverage.

How it is calculated

The tool uses straight daily pro-rata on a 365-day year: daily rate = annual premium ÷ 365, prorated premium = annual premium × days ÷ 365 and refund = annual premium − prorated premium. The annual premium is the full-year amount you were quoted, and days covered is how many days the policy was actually in force (it can be 0 to 365; decimals are accepted). Anything outside that range, or a negative premium, gives no result. The year is always treated as 365 days, even in a leap year. The refund line assumes you paid the full year and the insurer returns the unused part with no fees, taxes or short-rate penalty, which some insurers do apply.

Worked example

An annual premium of 1,460 is cancelled after 100 days. Daily rate = 1,460 ÷ 365 = $4.00. Prorated premium for the 100 days used = 1,460 × 100 ÷ 365 = $400.00. Refund of the unused 265 days = 1,460 − 400 = $1,060.00. If the insurer charged a cancellation fee, that fee would come off the refund, because this calculation has none.

Try this example →

Common mistakes

  • Entering the monthly premium in the annual field. The tool multiplies by days ÷ 365, so a monthly amount gives a prorated figure that is about twelve times too small.
  • Entering the days not used instead of the days covered. The first result is the premium for the days in force; the unused days are what the refund line reflects.
  • Expecting a short-rate result. Some policies refund less than pure pro-rata on early cancellation, but this tool is always straight daily pro-rata.
  • Forgetting taxes, fees and installment charges that are billed separately. The tool prorates only the premium you type in.

Sources

About this calculator

Insurance premiums are usually quoted as an annual figure, but coverage often starts or ends partway through the year — a policy canceled early, a new policy added mid-term, or coverage that only needs to run for a few months. Proration handles this by charging only for the fraction of the year the coverage is actually in force: prorated premium = annual premium × (days of coverage ÷ 365).

This calculator applies that pro-rata math for you, taking an annual premium and a number of covered days (up to 365) and returning the partial-term amount, the daily rate and the unused remainder as a refund. It always divides by 365, even in a leap year, so an insurer that prorates over 366 days may differ by a small amount. It's the same logic insurers and brokers use to calculate refunds on early cancellations, charges for mid-term policy changes, or the premium for a short-term or interim policy — useful for anyone checking that a prorated bill or refund lines up with what they should actually owe.

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