Texas Personal Lines Insurance Practice Exam

When an insurance policy is canceled mid-term, the insured typically receives a pro-rated refund based on the unused portion of their premium. This means that if the policyholder cancels their insurance before the end of the policy period, the insurance company will calculate the amount of premium that corresponds to the time remaining until the policy's expiration date. This refund is common practice and ensures that the policyholder is justly compensated for the coverage that has not been utilized.

However, factors such as the specific terms of the insurance policy, the length of time the policy has been in effect, and any potential fees outlined in the policy can influence the final refund amount. The pro-rated approach reflects the principle of fairness in that the insured is only paying for the coverage they actually received while avoiding any penalties or extra charges that might not align with typical insurance practices.