The short - rate premium after Tesslyn decided to cancel her policy after 6 months would be $402.60
How to find the short rate premium ?
The short-rate premium is determined based on the insurance company's policy, which often involves a percentage of the unearned premium.
Since Tesslyn canceled after 6 months, there are 6 months remaining in the policy term. Therefore, the unearned premium is:
Unearned Premium = (Number of Unexpired Months / Total Policy Months) * Annual Premium
Unearned Premium = (6 months / 12 months) * $660
Unearned Premium = (0.5) * $660
Unearned Premium = $330
Calculate the short-rate premium. The short-rate is often expressed as a percentage, and in this case, it's 61%.
Short Rate Premium = Annual Premium x Short Rate
Short Rate Premium = $660 x 0.61
Short Rate Premium = $402.60
The full question is;
Tesslyn decided to cancel her policy after 6 months. Her annual premium was $660. How much is the short-rate premium?
Look at the short rate by looking at the fire insurance short-rate and cancellation table.