Short Rate Penalty Calculator

Formula

The formula to calculate the Short Rate Penalty (SRP) is:

\[ \text{SRP} = \text{PRCF} \times \text{SRF} \]

Where:

\( \text{SRP} \) is the Short Rate Penalty
\( \text{PRCF} \) is the pro-rate cancellation factor
\( \text{SRF} \) is the short rate

What is Short Rate Penalty?

The Short Rate Penalty is a fee charged when an insurance policy is canceled before its expiration date. It is calculated by multiplying the pro-rate cancellation factor by the short rate.

Example Calculation

Let's assume the following values:

Pro-Rate Cancellation Factor (PRCF) = 0.8
Short Rate (SRF) = 100

Using the formula to calculate the Short Rate Penalty:

\[ \text{SRP} = 0.8 \times 100 = 80 \]

The Short Rate Penalty is 80.