Proration and Premium Allocation

During endorsements, cancellations, and unearned premium calculations, Socotra allocates premium to each coverage period using a single method, so all calculations are consistent.

  • If periods start and end at 00:00:00 (midnight), actual-millisecond proration is the same as actual-day

  • When allocating premium to billing periods, Socotra assigns the same amount to each whole billing period and then uses actual-millisecond proration for partial billing periods.


Consider the following scenario where a cancellation is processed before the end of the policy term:

  • The policy period is from June 13th for a one year term

  • The total premium for the year is $1200

  • The policyholder requests a cancellation effective September 19th

Resulting calculations:

  1. The remaining coverage period is from June 13th until September 19th, which is 3 months and 6 days.

  2. Since September 13th to October 13th is 30 days, the coverage period is 3 + 6/30 = 3.2 months long.

  3. Therefore, Socotra will allocate $1200 / 12 * 3.2 = $320 to the coverage period

  4. Socotra will invoice $100 per month, until the invoice due September 13th, which will be for the $20 remainder