What is an Insurance Premium Refund?

B. Miller

An insurance premium refund is when all or part of an insurance payment is returned to the individual who made the payment. This type of refund can be given for a number of different types of insurance, including car insurance, health insurance, life insurance, or private mortgage insurance. An insurance company will typically never send a refund without a written request from the named insured, however, so keep that in mind if circumstances have led to the possibility of an insurance refund.

If a vehicle owner cancels their car insurance, they may receive an insurance premium refund.
If a vehicle owner cancels their car insurance, they may receive an insurance premium refund.

The most common type of insurance premium refund occurs when insurance is purchased for a specified period of time, but then the individual who purchased the insurance chooses to cancel it before that time period is up. This will only be possible if the insurance has not been used; if the insurance company paid out any money on the policy for any reason, there is no chance of getting an refund on an insurance premium. If the policy was purchased for a year, however, and the yearly premium was paid up front, and the individual then cancels the policy without having used it after a few months, he or she may be entitled to a pro-rated insurance premium refund unless it was otherwise specified in the insurance documents.

An insurance premium refund may be issued for a life insurance policy.
An insurance premium refund may be issued for a life insurance policy.

An FHA mortgage insurance premium refund is another common example. This type of federal program allows individuals to purchase a home without putting twenty percent down, but they are then required to purchase private mortgage insurance (PMI). The purchaser must continue to pay the PMI until the equity in the home is at least twenty percent, at which time the PMI can be canceled. If individuals reach twenty percent equity in the home before the expected period, they may then usually request a partial refund of the private mortgage insurance premium.

In order to be eligible for any type of insurance premium refund, it will typically be necessary to contact the company that holds the policy and request its cancellation. One will generally need to fill out and sign a form, and within a few days to a few weeks should receive a check with the pro-rated amount of the refund. This means that the entire amount of the premium will not be refunded, simply the amount that has not been "used" based on the amount of time that the policy was active. This amount can be significantly lower than the premium, but it is still worth it to check with the company to determine eligibility.

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Discussion Comments


Can I return back the refund check I received and use it as a premium payment again?


I have received a refund for my car insurance premiums more than once, and have never had to request it in writing.

I always pay my insurance in one lump annual sum, so if I have any changes to my policy, I have a refund coming.

Once I sold an old car I had and did not replace it with another car for quite awhile. I received a refund on my premium because I had paid for the entire year up front.

Since I no longer needed the insurance when I sold the car, they sent me a refund check.

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