Annualized Premium
Nexsure utilizes a simple formula that takes a mid-term premium (debit
or credit), calculates the annualized value based on policy
term compared to effective date
of the mid-term premium, and adds it to the existing annualized values.
Example
- A commercial auto policy with a term of 1/1/2005
to 1/1/2006 and an original premium
of $10,000 exists.
- An endorsement to the policy is made to add an additional vehicle
effective 1/24/2005 with pro-rata
additional premium of $1,200.00. (That
is the cost of adding a vehicle from 1/24/2005 to 1/1/2006 or a total of 342 days.)
- Nexsure then uses the following formula to
determine the annualized amount of $1200:
$Billed Premium x 365 days / # days in force = $####.## (Annualized Premium)
1200 multiplied by 365 = 438,000 divided by 342 = $1,280.70 so the annualized
premium is $1,280.70.
- The
premium is added to the original annualized premium of $10,000. This
is displayed on the
policy info tab as:
Annualized $: $11,280.70
Billed Premium: $11,200.00