Pro RataCalculator

What is a pro rata refund?

A pro rata refund is the fairest way to cancel an insurance policy: you pay only for the days your coverage was actually in force, and the insurer returns the rest of your premium with no penalty. Cancel halfway through a $1,200 annual policy and a pro rata refund returns about $600 — exactly the unused half.

This calculator spreads your annual premium across the 365-day term, charges you for the days you used, and refunds the remainder. It is the no-penalty counterpart to a short rate calculation.

When do you get pro rata instead of short rate?

Most voluntary mid-term cancellations — switching insurers, finding a cheaper rate, or simply no longer wanting the policy — are refunded on a short rate basis, which keeps a few extra percentage points. But insurers generally waive the penalty and refund pro rata when the cancellation is not really your choice, including:

• ✓ Selling your vehicle or home
• ✓ A total loss of the insured vehicle or property
• ✓ Moving out of province
• ✓ The insurer cancelling your policy, or moving you to another of its products

Pro rata vs short rate — the difference in dollars

On a $1,200 policy cancelled at 90 days, a pro rata refund returns about $904 — you used roughly a quarter of the year. A short rate refund on the standard table would return about $828, so the roughly $76 difference is the short rate penalty. Knowing which basis applies to your cancellation is worth asking about; our short rate vs pro rata guide explains exactly when each one is used.