when a policy is cancelled before its expiry date, what is owed to the insured is

When a policy is cancelled before its expiry date, the insurer owes the insured a return premium. A return premium is the portion of the premium paid by the insured for the remaining period of coverage that they did not use. In other words, it is the unearned premium that the insurer has not yet used to provide coverage for the policyholder. For example, if an insured paid a $1,200 premium for a 12-month policy, but cancels the policy after 6 months, the insurer would owe the insured a return premium of $600, which represents the unused portion of the premium. Therefore, the return premium is the amount that the insurer is obligated to refund to the insured when the policy is cancelled before its expiry date.