Legal Definitions - advance premium

Advance premium refers to a payment made before the start of the period covered by an insurance policy. It is a type of premium, which is the periodic payment required to keep an insurance policy in effect. For example, if you pay for a year's worth of car insurance upfront, that payment is considered an advance premium.

Another type of premium is earned premium, which is the portion of an insurance premium applicable to the coverage period that has already expired. For instance, if you have a one-year insurance policy that costs $1,200, the earned premium after three months is $300.

Unearned premium, on the other hand, is the portion of an insurance premium applicable to the coverage period that has not yet occurred. Using the same example as above, the unearned premium after three months is $900.

Overall, advance premium is just one type of premium payment in the insurance industry.