Asked by Timmy Nickel on May 09, 2024
Verified
Hartford Corporation insured a building for $400,000 for one year at a premium rate of $6.50 per thousand. Six months later the Hartford Corporation sold the building and canceled the policy. The insurance company refunded the remaining half of the premium at the short-rate based on a penalty of 15% of the annual premium. Compute the amount that the six months of insurance cost the Hartford Corporation.
Short-rate Refund
A partial refund of an insurance premium, calculated using the short-rate method, which accounts for administrative costs and the increased risk to the insurer of policies cancelled before their original expiration.
Premium Rate
The price of an insurance premium per unit of coverage, often expressed in terms of monthly or annual cost.
- Analyze and calculate insurance refunds and costs associated with policy cancellations and changes in coverage.
Verified Answer
CP
Learning Objectives
- Analyze and calculate insurance refunds and costs associated with policy cancellations and changes in coverage.
Related questions
Allied Industries, Inc ...
Cameron Insurance Company Insured Driver Gifford at an Annual Premium ...
Brant Insurance Company Insured Driver Moore at an Annual Premium ...
Garnet Corporation Insured a Building for $370,000 for One Year ...
Universal Insurance Company Does Business in a State Having No-Fault ...