Estimated Premium
What Does Estimated Premium Mean?
An estimated premium is a rough estimate of a premium cost that an insurer provides to give a prospective policyholder an idea of how much premiums would cost for a policy. However, insurers are not legally obligated to keep premiums at a set amount until both parties sign a binding insurance contract.
Insuranceopedia Explains Estimated Premium
Insurers often present estimated premiums because until the actual contract is signed, there may be many changes made with regards to what is being covered, for how much, or for how long, and so on. For example, a person buying property insurance may have to choose which riders they would like to add to the policy before the agreement is actually made. The premium prices will change depending on the specific coverage the person opts for. This is why insurers initially provide estimated premiums, instead of a set-in-stone, or final, price.
