What Does Premium Reserve Mean?

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What does Premium Reserve mean? Read on to discover the definition & meaning of the term Premium Reserve - to help you better understand the language used in insurance policies.

Premium Reserve

Premium Reserve

Insurers earn the premium paid for an insurance policy over the life of the policy. In other words, one-twelfth of an annual premium is earned each month. An unearned premium reserve is maintained on an insurer's balance sheet to reflect the unearned premiums that would be returned to policyholders if all policies were canceled on the date the balance sheet was prepared.

We hope the you have a better understanding of the meaning of Premium Reserve.

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