Return Premium Clause

The Return Premium Clause is a common provision in international trade insurance policies, primarily applicable to cargo transportation insurance. It means that if the insured cancels the policy or reduces the insured amount during the insurance period for any reason, the insurer will refund a portion of the paid premium on a pro rata basis for the unexpired days. It is often used in long-term or open policies, such as annual marine cargo insurance. Precautions include: refunds usually require conditions such as 'no claims incurred' or 'contract termination not due to the insurer's liability'; the refund calculation method (e.g., daily pro rata) must be clearly stated in the clause; it is the opposite of a 'No Return Premium Clause,' which stipulates no refund under any circumstances. The difference is that the Return Premium Clause gives the insured the right to a partial premium refund, while a deductible clause involves self-bearing losses, and the two are different in nature. Foreign trade practitioners should note whether the refund affects the continuity of insurance coverage, to avoid lack of protection when cargo risks occur due to policy cancellation.