Which statement best defines written premium?

Which statement best defines written premium?

• A. The total premium charged for the policy period
• B. The amount earned during the policy period
• C. The portion of premium set aside for endorsements
• D. The portion of premium refunded on cancellation

Answer: (A)

Written premium is the total premium charged for policies issued during a specific period. It represents the amount the insurer has billed, including new business, renewals, and endorsements that increase the premium. This differs from earned premium, which is the portion of that written premium that the insurer has earned by providing coverage as time passes. For example, a policy issued for twelve months with a total premium of $1,200 has a written premium of $1,200, even though only part of that amount is earned as the year goes on. If the policy is canceled, the unearned portion may be refunded, but the written premium was the full amount originally charged. The other statements don’t fit because the earned amount describes earned premium, endorsements are not the definition of written premium, and refunds on cancellation relate to the unearned portion, not the entire written premium.

Written premium is the total premium charged for policies issued during a specific period. It represents the amount the insurer has billed, including new business, renewals, and endorsements that increase the premium. This differs from earned premium, which is the portion of that written premium that the insurer has earned by providing coverage as time passes. For example, a policy issued for twelve months with a total premium of $1,200 has a written premium of $1,200, even though only part of that amount is earned as the year goes on. If the policy is canceled, the unearned portion may be refunded, but the written premium was the full amount originally charged. The other statements don’t fit because the earned amount describes earned premium, endorsements are not the definition of written premium, and refunds on cancellation relate to the unearned portion, not the entire written premium.