How to prorate an insurance premium
A premium buys cover for a period. When the policy ends early, the days already covered are earned by the insurer and the remaining days are unearned. Prorating splits the premium by days:
Refund = premium × unused days ÷ days in the policy period
Example: an annual premium of CHF 1,200.00 for January 1 to December 31, 2026. The policy is cancelled effective August 16, the first day without cover.
- Earned premium: 227 days (Jan 1 – Aug 15) → (227/365) × 1,200.00 = CHF 746.30
- Refund: 138 days (Aug 16 – Dec 31) → (138/365) × 1,200.00 = CHF 453.70
The calculator above shows this example. Enter your own premium, policy dates and the first day without cover.
Pro rata or short rate?
A pro rata cancellation returns exactly the unused share. A short-rate cancellation returns the pro rata amount minus a penalty from the policy's short-rate table. In the US, short rate typically applies when the policyholder cancels and pro rata when the insurer cancels, but the policy wording decides. In Switzerland, the premium is generally divisible: on early termination it is only owed up to the end of the contract (Art. 24 VVG, with statutory exceptions).
Prepaid insurance at year-end
The same math answers the accounting question. An annual premium of CHF 3,600.00 paid for October 1, 2026 to September 30, 2027 covers 92 days of 2026 and 273 days of 2027. With a December 31 year-end:
- Insurance expense 2026: (92/365) × 3,600.00 = CHF 907.40
- Prepaid insurance at Dec 31: (273/365) × 3,600.00 = CHF 2,692.60
Oct 1, 2026 (premium paid):
Dr Prepaid insurance 3,600.00
Cr Cash 3,600.00
Dec 31, 2026 (expired portion):
Dr Insurance expense 907.40
Cr Prepaid insurance 907.40In the calculator, enter the policy dates and January 1 of the new year as the split date. For a month-by-month amortization schedule and PDF or Excel export, use the full calculator with the month view.
Related calculators
- Rent proration calculator — partial months on move-in and move-out.
- SaaS proration calculator — plan changes and deferred revenue.
- Proration calculator — split any amount across years, quarters or months.
- Versicherungsprämie abgrenzen — the same topic in German, with Swiss bookkeeping.
Frequently asked questions
How do I calculate a prorated insurance refund?
Refund = premium × unused days ÷ days in the policy period. A CHF 1,200.00 annual premium for Jan 1 to Dec 31, 2026, cancelled effective Aug 16, leaves 138 of 365 days unused: a refund of CHF 453.70. The insurer keeps CHF 746.30 for the 227 days of cover.
What is the difference between pro rata and short rate?
Pro rata returns the exact unused share of the premium. Short rate returns the pro rata amount minus a penalty set by the policy’s short-rate table. In the US, short rate typically applies when the policyholder cancels and pro rata when the insurer cancels; the policy wording decides. In Switzerland, the premium is generally divisible on early termination (Art. 24 VVG).
Does a leap year change the calculation?
Yes. Count the actual days of the policy period: a policy that includes February 29 has 366 days, so each day is worth slightly less. The calculator counts the real calendar days between the dates you enter.
How do I record prepaid insurance?
Book the premium to prepaid insurance (an asset) when you pay it, then move the expired part to insurance expense each period. For CHF 3,600.00 covering Oct 1, 2026 to Sep 30, 2027, insurance expense for 2026 is CHF 907.40 (92 days) and CHF 2,692.60 stays prepaid at December 31.
What if I pay the premium monthly?
Then only the current month needs prorating: the refund is the monthly premium × unused days of that month ÷ days in the month. Enter the month as the policy period and the cancellation date as the first day without cover.