Mar 1, 2003 purchased insurance for 36 months = $450 a month.

Year 1, Dec 31, 2003 insurance expense will be $4,500 and your remaining Prepaid balance will be $11,700

Year 2, Dec 31, 2004 insurance expense will be $5,400 and your remaining Prepaid Insurance will be $6,300

Year 3, Dec 31, 2005 insurance expense will be $5,400 and your remaining Prepaid Insurance will be $900

Beginning year 4 you have 2 months of insurance because you have used 34 of 36 months or $450 a month + $450 a month = $900 or 2 months of insurance left in Prepaid insurance.

On March 31, 2003 you purchase an insurance policy for 36 months, which means it will expire on 28 Feb, 2006. Which is in Jan and Feb of year 4, which also means you have 2 months of unexpired insurance or $900.