What is a Minimum Earned Premium?
Each policy has a minimum earned premium of $100. This means that the minimum cost for a policy is $100. If the annual premium is $300 ($25/month) then the $100 minimum earned premium is met after four months and the policy can be cancelled on a prorate basis. If the policy is cancelled before the four month mark, say after two months, then $50 is due upon cancellation. This is the balance of the minimum earned premium.