Estimate insurance refunds for cancellations in North Carolina
Days Policy in Force:0
Unearned Premium (Pro-Rata):$0.00
Short Rate Penalty Applied:$0.00
Estimated Refund Amount:$0.00
*This calculator provides an estimation based on standard short-rate percentages (typically 90% of unearned premium). Actual refunds in North Carolina may vary based on specific carrier tables filed with the NC Rate Bureau. Always verify with your insurance agent.
function calculateNCShortRate() {
// 1. Get DOM elements
var premiumInput = document.getElementById('annualPremium');
var penaltyInput = document.getElementById('penaltyRate');
var startInput = document.getElementById('policyStart');
var cancelInput = document.getElementById('cancelDate');
var resultsDiv = document.getElementById('ncResults');
// 2. Parse values
var premium = parseFloat(premiumInput.value);
var penaltyPercent = parseFloat(penaltyInput.value);
var startDateStr = startInput.value;
var cancelDateStr = cancelInput.value;
// 3. Validation
if (isNaN(premium) || premium <= 0) {
alert("Please enter a valid Annual Premium amount.");
return;
}
if (isNaN(penaltyPercent) || penaltyPercent < 0) {
alert("Please enter a valid penalty percentage.");
return;
}
if (!startDateStr || !cancelDateStr) {
alert("Please select both Policy Start and Cancellation dates.");
return;
}
var start = new Date(startDateStr);
var cancel = new Date(cancelDateStr);
if (cancel 365) {
alert("Cancellation date exceeds standard 1-year policy term. Capping calculation at 365 days.");
diffDays = 365;
}
// 5. Calculation Logic
var totalPolicyDays = 365; // Standard insurance year
var fractionEarned = diffDays / totalPolicyDays;
// Pro-Rata Calculations
var earnedPremium = premium * fractionEarned;
var unearnedPremium = premium – earnedPremium;
// Short Rate Penalty Calculation
// Formula: Unearned Premium – (Unearned Premium * Penalty%)
// Or simply: Penalty Amount = Unearned Premium * (Penalty% / 100)
var penaltyFactor = penaltyPercent / 100;
var penaltyAmount = unearnedPremium * penaltyFactor;
// Final Refund
var refundAmount = unearnedPremium – penaltyAmount;
// Handle negative refund (if penalty exceeds unearned – rare but mathematically possible if inputs are extreme)
if (refundAmount < 0) refundAmount = 0;
// 6. Display Results
document.getElementById('daysActive').innerText = diffDays + " days";
document.getElementById('proRataUnearned').innerText = "$" + unearnedPremium.toFixed(2);
document.getElementById('penaltyAmount').innerText = "-$" + penaltyAmount.toFixed(2);
document.getElementById('finalRefund').innerText = "$" + refundAmount.toFixed(2);
// Show results area
resultsDiv.style.display = "block";
}
Understanding Short Rate Cancellation in North Carolina
When an insurance policy is cancelled in North Carolina before its expiration date, the method used to calculate the refund depends heavily on who initiates the cancellation. In the context of North Carolina insurance regulations, understanding the difference between "Pro-Rata" and "Short Rate" cancellation is essential for policyholders expecting a return of premium.
What is a Short Rate Cancellation?
A Short Rate cancellation typically occurs when the insured (you) cancels the policy before the term ends. Because the insurance company incurs administrative costs to set up the policy, they are often permitted to retain a penalty percentage of the unearned premium. This differs from a Pro-Rata cancellation, where the insurer cancels the policy and must refund the exact proportion of unused days without penalty.
How the Calculation Works
While specific carriers in North Carolina may file their own unique "Short Rate Tables" with the NC Rate Bureau, a common approximation used in the industry involves a percentage penalty on the unearned premium.
Pro-Rata Unearned Premium: This is the amount of money for the days remaining on the policy. For example, if you cancel exactly halfway through the year, the unearned premium is 50%.
The Penalty: A common short rate penalty is 10% of the unearned premium. This means you would receive 90% of your pro-rata refund.
For instance, if your unearned premium is $500, a 10% short rate penalty would be $50. Your total refund would be $450.
When is Short Rate Applied in NC?
In North Carolina, Short Rate calculations are frequently applied to:
Personal Auto Insurance (when cancelled by the insured without replacing coverage with the same carrier).
Homeowners Insurance.
Commercial Liability policies.
It is important to note that if you are cancelling because you have sold the insured property (like a car or home) or if you are deploying for military service, some insurers may waive the short rate penalty and offer a full pro-rata refund. Always check with your NC licensed insurance agent to confirm the specific terms of your policy.