In insurance terms, what does unearned premium refer to?

Unearned premium specifically refers to the portion of the insurance premium that has been collected by the insurer but has not yet been earned due to the coverage period not being completed. For example, if a policyholder pays for an annual policy upfront, the premium is considered unearned at the start of the policy term since the insurer has not yet provided coverage for the entire duration. As time passes and the coverage is provided, that unearned premium gradually becomes earned. This concept is crucial in understanding how insurers manage their finances and obligations since they are responsible for potential claims during the coverage period for which they've collected premiums.

The other options discuss aspects of premiums but do not accurately define unearned premium. For instance, a premium refunded upon policy expiration relates more to the return of any unutilized premium rather than the definition itself. Premium charged in excess of limits refers to overcharges and not to the timing of when premiums are earned, while a premium that is not refundable pertains to terms of policy cancellation rather than the concept of unearned premium.