prepaid insurance

Definition

Payment made in advance in return for insurance services that are to be rendered over a specified period of time. A person or entity who purchases prepaid insurance is called a policy holder. They are liable for any deductibles should an insurance claim be filed. This is accounted for as a short-term asset or a prepaid expense on company books.

Use prepaid insurance in a sentence

You may want to take out some prepaid insurance so that you know you will be covered in the coming months.

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They got some prepaid insurance and that was all in advance, and that was good for them, cause they needed it.

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Eddie is looking to purchase his first house. He is trying to determine whether or not he wants to escrow for Insurance. If he utilizes escrow for his insurance payment then he will be able to pay a smaller amount on a monthly basis for his insurance. If he does not he will essentially have Prepaid Insurance.

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