Understanding Minimum and Deposit Premium
2009 January 6
Minimum and deposit premium is the amount of due at the inception of the product liability policy. Even though the policy is “ratable (subject to adjustment based on rate per sales)”, under no circumstances will the annual earned premium be less than minimum premium.
In other words, the product liability policy may generate additional premium on audit because of an increase of actual sales over the projected sales, but will not generate a return premium, if actual sales fall short of the projected sales.