If you cancel your NYSIF (New York State Insurance Fund) workers' compensation policy before the anniversary date, you are typically subject to a Short Rate Penalty. Unlike a pro-rata cancellation—where you only pay for the exact days of coverage—a short rate cancellation includes an administrative penalty for ending the contract early.
How the Calculation Works
While NYSIF uses a specific table based on the number of days the policy was active, the industry standard short rate is approximately 90% of the pro-rata refund. In other words, the insurance carrier keeps the earned premium plus 10% of the unearned premium as a penalty.
Pro-Rata: (Annual Premium / 365) × Days Active.
Short Rate Penalty: Usually 10% of the remaining (unearned) premium.
Total Retained: Pro-Rata + Penalty.
Example Scenario
Imagine a business with a $12,000 annual premium that cancels exactly halfway through the year (182.5 days):
Pro-Rata Earned: $6,000
Unearned Premium: $6,000
Penalty (10% of Unearned): $600
Total Earned by NYSIF: $6,600
Refund to Policyholder: $5,400
Note: This calculator provides an estimate based on standard NY short rate logic. NYSIF may apply specific minimum premiums or different table factors depending on your specific policy terms and the reason for cancellation (e.g., retirement vs. switching to a private carrier).
function calculateShortRate() {
var annualPremium = parseFloat(document.getElementById('annualPremium').value);
var startVal = document.getElementById('startDate').value;
var cancelVal = document.getElementById('cancelDate').value;
if (isNaN(annualPremium) || !startVal || !cancelVal) {
alert("Please fill in all fields with valid data.");
return;
}
var start = new Date(startVal);
var cancel = new Date(cancelVal);
// Calculate difference in time
var diffTime = cancel – start;
var diffDays = Math.ceil(diffTime / (1000 * 60 * 60 * 24));
if (diffDays 365) {
alert("This calculator is for a standard 12-month policy cycle (max 365 days).");
return;
}
// Standard short rate math (90% of pro-rata refund rule)
var proRataEarned = (annualPremium / 365) * diffDays;
var unearnedPremium = annualPremium – proRataEarned;
// Short rate penalty is roughly 10% of unearned premium
var penalty = unearnedPremium * 0.10;
// Total retained by carrier
var totalEarned = proRataEarned + penalty;
// If penalty makes total earned > annual premium (edge case for very late cancellation)
if (totalEarned > annualPremium) {
totalEarned = annualPremium;
penalty = annualPremium – proRataEarned;
}
var refund = annualPremium – totalEarned;
// Display results
document.getElementById('resDays').innerText = diffDays;
document.getElementById('resProRata').innerText = "$" + proRataEarned.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resPenalty').innerText = "$" + penalty.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resTotalEarned').innerText = "$" + totalEarned.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resRefund').innerText = "$" + refund.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resultsArea').style.display = 'block';
}