Unearned premium revenue
/What is Unearned Premium Revenue?
Unearned premium revenue is a liability account that is used by an insurer to record that portion of premiums received from customers that it has not yet earned. For example, an insurer receives a $1,200 payment from a customer that is intended to provide insurance coverage for the next year. The entire amount of this payment is initially recorded in the unearned premium revenue account, with a debit offset to the cash account. In each subsequent month, the insurer shifts $100 of the liability to the revenue account by debiting the unearned premium revenue account and crediting the revenue account. During the entire period covered by the insurance contract, the insurer has access to the cash paid to it by the insured party.