what is an earned premium 
the term earned premium refers to the premium collected by an insurance company for the portion of a policy that has expired it is what the insured party has paid for a portion of time in which the insurance policy was in effect but has since expired since the insurance company covers the risk during that time it considers the associated premium payments it takes from the insured party as unearned once the time has expired it can then record it as earned or as a profit understanding earned premiumsan earned insurance premium is commonly used in the insurance industry because policyholders pay premiums in advance insurers don t immediately consider premiums paid for an insurance contract as earnings while the policyholder meets their financial obligation and receives the benefits an insurer s obligation begins when it receives the premium 