A pre-payment is the term used when the insurance company makes an interim payment to the insured party, before the settlement date. If your car was written off in an accident and your insurance company agrees to pay out a part of the claim before the final settlement is made, it will be called a prepayment. This scenario is unusual in the insurance industry.

A pre-debit, on the other hand, is where the insurance company debits the insured’s account with a renewal premium, at a rate not yet accepted by the insured person or his agent, on the date the policy is due for renewal.