DEFINITION
Cancellation, Short Rate

A cancellation on which the earned premium is more than the exact proportion that the elapsed period of the policy bears to the policy term. For example, an annual policy in force for six months would have a short rate earned premium of 60 percent of the annual premium. The short rate cancellation table often is printed on policy forms. When a policy is canceled at the request of the insured, the cancellation is made on a short rate basis.

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