Market & Policy · Insurance Term
Minimum Earned Premium (MEP)
Definition
A minimum earned premium is the part of a policy's premium the insurer keeps no matter when the policy is canceled. If a policy has a 25% minimum earned premium, you will not get back more than 75% of the premium, even if you cancel after one day.
In Plain English
Normally, when a policy is canceled midterm, some unearned premium is returned. A minimum earned premium sets a floor on what the insurer keeps. It is common on surplus lines insurance policies and on some wind, coastal and other specialty coverages. Some policies state the premium is 100% fully earned, often during a hurricane season.
The minimum earned premium applies on top of the cancellation method. Even if the policy would otherwise refund premium using a pro rata or short-rate cancellation method, the refund cannot reduce the insurer's share below the minimum.
Policy and inspection fees on surplus lines policies are often fully earned as well. These terms matter most if you plan to sell a property, refinance or replace a policy midterm.
Not sure how your policy handles this? Have us review it, or get a quote.
Example
Hypothetical: an owner pays $40,000 for a surplus lines property policy with a 25% minimum earned premium. The owner sells the building 2 months later and cancels. The insurer keeps at least $10,000 (25%), so the refund is at most $30,000, before any fees that are also fully earned.
What to Watch For
- Ask about the minimum earned premium on every quote before you bind.
- Factor it in if you might sell or refinance during the policy term.
- Check which fees and taxes are fully earned.
- If you finance the premium, ask how the minimum earned premium affects the payoff.
Last updated October 14, 2026 · Primesure editorial team · How We Write