minimum and deposit premium (M&D)

Minimum and deposit premium is a premium that is fully earned by the insurer at the inception of the policy and is nonrefundable if the policy is canceled.

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Additional Information

Though infrequently used, this approach can be used for policies that have a flat premium or a premium that is adjusted at the end of the policy term to reflect the actual exposure as determined via an audit. This is a common approach with excess of loss reinsurance, which requires initial premium payment in advance, adjusted annually in arrears based on exposure audits.