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Understand Proration and Refunds
Proration and refund settings control how surcharge amounts are adjusted and reversed across policy lifecycle events.
Required Editions
| Available in: Lightning Experience |
| Available in: Professional, Enterprise, and Unlimited Editions where Insurance Brokerage is enabled |
Proration Allowed
The Proration Allowed checkbox controls whether the surcharge amount is prorated based on the number of days the policy is effective.
If Proration Allowed is enabled, the system prorates the surcharge amount during issuance, endorsement, renewal, or cancellation based on day count. Billing supports these prorated changes.
If Proration Allowed is disabled, the system applies the full term amount during midterm changes. This is treated as a price-based change, and billing doesn’t currently support price-based endorsements. As a result, billing may fail for those transactions.
Proration ensures that charges and refunds reflect the actual number of days each policy version is in effect.
For example, a policy is issued for a 12-month term with a surcharge of ₹1,200, and Proration Allowed is enabled on the surcharge.
When the policy is issued:
- The system calculates the surcharge based on the policy effective period.
- The amount is prorated based on the number of days in the policy term and included in billing.
Midway through the term, the policy is endorsed with an effective date after 3 months.
Because Proration Allowed is enabled:
- The system recalculates the surcharge amounts for the affected policy versions using day-based proration.
- Charges apply only for the number of days each policy version is effective.
- Billing reflects the prorated amounts instead of applying the full term surcharge again.
Refund Allowed
The Refund Allowed checkbox controls whether a refund is generated when a policy is canceled before the end of the term.
- If enabled, the system generates a refund for the prorated amount.
- If disabled, no refund is generated even if the surcharge is partially chargeable.
For example, a policy is issued with the following details
- Term: January 1, 2026 – December 31, 2026
- Surcharge Amount: ₹1,200
- Refund Allowed: Enabled
The policy is canceled effective April 1, 2026.
Because Refund Allowed is enabled:
- The system determines the number of unused days between April 1, 2026 and December 31, 2026.
- The surcharge amount is prorated based on the cancellation date using day-based proration.
- A refund is generated for the unused portion of the surcharge.
If Refund Allowed is disabled:
- The policy is still canceled.
- No refund is generated.
- The full ₹1,200 surcharge remains charged, even though the policy ended early.
