when filling out the lost policy release also called a cancellation lost policy release the insured typically chooses between three types of cancellations flat pro rata and short rate 
flat cancellations are used when the insurer was never exposed to risk because the coverage never went into effect in this case the premium is often refunded in full if an insurance policy is canceled before it is expired the insured may be eligible to receive a portion or all of the remaining unearned premium held by the insurer this is called a pro rata cancellation the unearned premium represents the money that an insurer has collected from the sale of the policy but which is set aside to cover the liability created when the policy was underwritten short rate cancellations are used when the insured fails to pay premiums and the insurance company requests that the policy be canceled lost policy releases may also be used if an insurer issues a replacement policy once a lost policy release is signed the insurer is no longer responsible for any claims made after the cancellation date on the policy being replaced however in such instances it may be smart to retain old policy documents just in case there is an issue that arises regarding the replacement insurance policy 