Prepaid Insurance

AAA

DEFINITION of 'Prepaid Insurance'

Payments that are made in advance for insurance services or coverage. The period for which insurance is prepaid is generally one year, but may exceed a year in certain cases. Prepaid insurance that expires in a year is classified as a current asset on a corporation's balance sheet.

INVESTOPEDIA EXPLAINS 'Prepaid Insurance'

Unless a claim has been made, prepaid insurance is usually renewable by the policy-holder shortly before the expiry date on the same terms and conditions as the original insurance contract. However, the premiums may be marginally higher to account for inflation and other operating factors.

RELATED TERMS
  1. Prepayment

    The satisfaction of a debt or installment payment before its ...
  2. Premium

    1. The total cost of an option. 2. The difference between the ...
  3. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of ...
  4. Insurance

    A contract (policy) in which an individual or entity receives ...
  5. Grace Period

    A provision in most loan and insurance contracts which allows ...
  6. Lloyd's Of London

    A British insurance market where members join hands as syndicates ...
Related Articles
  1. 15 Insurance Policies You Don't Need
    Insurance

    15 Insurance Policies You Don't Need

  2. Getting the Whole Story on Variable ...
    Options & Futures

    Getting the Whole Story on Variable ...

  3. Variable Vs. Variable Universal Life ...
    Retirement

    Variable Vs. Variable Universal Life ...

  4. Life Insurance: Putting A Price On Peace ...
    Insurance

    Life Insurance: Putting A Price On Peace ...

comments powered by Disqus
Hot Definitions
  1. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  2. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  3. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  4. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  5. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  6. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
Trading Center