Insurance Proration Calculator

When a property sells mid-policy-year, the prepaid homeowner insurance premium has to be split. This calculator computes the refund the seller is owed — whether by cancellation or buyer assumption.

Annual premium (fully paid)

Policy start month (1-12)

Closing month (1-12)

Closing day

Policy transfer

Seller gets back

$791

refund or closing credit

Days remaining on policy

165

Per-day premium

$4.79

Handling

Seller cancels & gets refund

How the math works

Homeowner insurance is typically prepaid for a full year. When ownership changes, the seller either cancels and gets a refund from the carrier, or the buyer assumes the policy and credits the seller at closing for the unused portion.

Most transactions cancel because the new owner needs a policy in their own name as a lender-required condition of closing. The title company handles the credit math via a pro-rate adjustment on the Closing Disclosure.

How to Use

Enter the annual premium paid at the start of the policy year.
Enter the policy start month.
Enter the closing month and day.
Pick whether the seller cancels (refund from carrier) or the buyer assumes (credit at closing).

Frequently Asked Questions

Does the buyer assume insurance in most closings?

No — rarely. The lender requires a new policy in the buyer's name. The seller cancels the old policy and the carrier refunds the unused portion (pro rata or short-rate depending on policy terms).

Pro rata vs short-rate refund?

Pro rata refunds the exact unused portion. Short-rate applies a cancellation penalty (~10%). Most modern policies are pro rata but check your declarations page before assuming the refund amount.

What about the mortgage escrow?

The escrow holds enough to pay the NEXT annual premium, not the current one. The current prepaid year is separate. The escrow balance is returned separately after payoff — see the Escrow Refund Calculator.

Does this apply to condo insurance (HO-6)?

Yes — condo and townhome HO-6 policies prorate the same way. The HOA master policy is handled by the association and not included in owner-level proration.