Estimated Premium
What Does Estimated Premium Mean?
An estimated premium is a rough estimate of the premium cost that an insurer provides to give a prospective policyholder an idea of how much the premiums might be for a policy. However, insurers are not legally obligated to maintain the premium 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, various aspects of the policy may change, such as the coverage amount, duration, or terms. For example, someone purchasing property insurance may need to decide which riders to add to the policy before the agreement is finalized. The premium prices will vary based on the specific coverage options selected. This is why insurers initially provide estimated premiums rather than a final, fixed price.
