Okuzeka
Insurance vocabulary · Premiums & Pricing

Pro rata

Meaning in insurance, with examples

/ˌproʊ ˈrɑːtə/adjectiveCommon term

In insurance, pro rata means: Calculated in proportion to the time or share involved, for example a premium refund based on the exact number of unused days.

In Turkish: gün esasına göre, orantılı, gün esaslı

How it is used

Used for refunds, mid-term changes and shared risks: a pro rata refund, a pro rata premium. In cancellations the alternative is 'short-rate', where the insurer keeps a little more than the time-based share. It comes from Latin and has no hyphen.

Example sentences

  1. If you cancel after four months, we'll refund the premium on a pro rata basis.

  2. The additional premium for the new vehicle was calculated pro rata to the end of the policy year.

Common collocations

  • pro rata refund
  • on a pro rata basis
  • pro rata premium
  • calculated pro rata
  • cancellationEnding an insurance policy before its expiry date, either by the customer or by the insurance company.
  • endorsementA written change added to an existing policy, for example to add a driver, change an address or increase the sum insured.
  • premiumThe amount of money a customer pays to an insurance company for a policy, usually once a year or in monthly instalments.
  • quota shareA proportional reinsurance arrangement in which the insurer and reinsurer share the premiums and claims of every policy in a fixed percentage.

More terms: Premiums & Pricing

Practise with graded reading

Reading at the right level is the fastest way to make new words stick. Pick free English books by level:

This page explains English vocabulary for learners. It is not financial advice.