Reasons for the unearned premium reserve include which of the following?
I.To pay losses that occur during the policy period.
II.To pay premium refunds to policyholders in the event of cancellation.
A)I only
B)II only
C)both I and II
D)neither I nor II

Question

Quizplus · Accepted Answer

The unearned premium reserve is a liability on the insurer's balance sheet that represents the portion of the premiums customers have paid in advance for coverage that has not yet been provided. This reserve is required by insurance regulations and serves two primary purposes: to pay losses that occur during the policy period and to pay premium refunds to policyholders in the event of cancellation. Therefore, both I and II are reasons for the unearned premium reserve.

Reasons for the Unearned Premium Reserve Include Which of the Following