Unearned Premium Insurance

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An insurance policy compensating a policyholder for the loss of premiums that it must refund due to the occurrence of an insured event. For example, suppose one prepays premiums on car insurance for January, February and March. If the car is destroyed in February, unearned premium insurance reimburses the policyholder for at least a portion of March's premium. As with all insurance, one must pay a premium to receive the coverage.

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