Advance Premium

What Does Advance Premium Mean?

The advance premium is a payment made by the insured to the insurance company before the specified payment date. It can also refer to the initial payment for a policy, where the actual premium amount has not yet been determined.

Insuranceopedia Explains Advance Premium

Payment made in advance or before the scheduled payment date may be incentivized by the insurance company, often offering a discount on the actual premium price to the policyholder. Paying early is one of several ways policyholders can lower what they spend on coverage each year, along with the other tactics listed in how to save money on car insurance.

It can also refer to the first payment for a policy, which is based on an estimate since the valuation of the coverage has not yet been completed. This payment is made to bind the insurer to the insured. Once the insurer finishes valuing the coverage, the final figure depends on the same rating factors that determine how much car insurance costs for any given driver. Adjustments or the actual premium amount are provided in the notice for the second premium payment. This is also referred to as the deposit premium.