In insurance, Deferred Acquisition Costs is an asset on the balance sheet representing the deferral of the cost of acquiring new insurance contracts, thereby amortising the costs over their duration.

What is deferred acquisition cost?

Deferred Acquisition Cost (DAC) — the amount of an insurer's acquisition costs incurred as premium is written but earned and expensed over the term of the policy. The unearned portion is capitalized and recognized as an asset on the insurer's balance sheet.

What are examples of acquisition costs?

Acquisition cost refers to the all-in cost to purchase an asset. These costs include shipping, sales taxes, and customs fees, as well as the costs of site preparation, installation, and testing. When acquiring property, acquisition costs can include surveying, closing fees, and paying off liens.