Renters Insurance: Terms and Glossary
Renters insurance is for people who rent any living space whether it’s an apartment, townhouse, single-family home or any other type of housing.
Renters insurance is used and maintained by people to cover their belongings within their living premises like apartment, townhouse, condo or home. It also covers the tenant for liability coverage that may arise due to an incident on the rented premises.
Some key and common terms used in Renters Insurance quote or policy.
Knowing the lingo of trade is very important to understand and make the right decision. Familiarizing yourself with the common insurance industry terms for renters insurance is very important so you can understand your coverages and at the same time better equipped to negotiate for the best price on your renters insurance quote or policy.
Here are some of the common and important terms to know in Renters Insurance:
Actual Cash Value (ACV) –Current cash value of the property. This is calculated by reducing depreciation from the replacement cost.
Additional Living Expenses (ALE) –Coverage that provides for temporary living expenses in the event a disaster makes your place unavailable. This coverage usually pays for hotel accommodation, meals, and other temporary rentals or living expenses while the rental home is being repaired
Annual Limit –A maximum cap on the amount your insurance company will pay out to you in any calendar year.
Appraisal –An appraisal is an unbiased professional evaluation to determine the insurable value of property or amount of a loss.
Claim –A formal request made by a policyholder to an insurance company to recover for damage or loss covered through the policy coverages.
Coverage –Insurance coverage basically represents specifically, how much protection your insurance policy provides. Usually, there are several different types of coverages listed in an insurance policy.
Deductible –Deductible is the amount of money the policyholder agrees to pay in an insurance claim before the insurance company starts paying based on the insurance coverages. The policyholder is expected to come up with this amount of money before a claim request starts paying from the insurance company.
Depreciation –A reduction in the value of property due to time, wear and tear.
Effective Date –The effective date for renters insurance coverage or policy is the date when your coverage or policy officially becomes active. It is this date when a policyholder can start receiving services and your insurance company will pay out the benefits.
Endorsement –An insurance amendment to a renters insurance policy may be used to change the terms of the policy by making additions, deletions, exclusions or otherwise alter any coverages.
Exclusion –An exclusion in a policy narrows the scope of coverages provided by the insurance company. It is a means or a policy provision that eliminates or reduces coverage for some of the events or certain types of risks.
Grace Period — An insurance grace period in a renters insurance is a specific amount of time during which policyholder can pay off an overdue balance without coverage lapse. Generally, insurance companies offer a grace period of around 30 days, although it may vary significantly between different insurance companies.
Liability Coverage –Liability coverage on a renters Insurance policy covers for bodily injury and property damage. In the event of an accident, If you’re found responsible for an injury to a guest at your rented home or apartment, liability coverage on your renters insurance policy may help pay for the medical bills that your guest may incur.
Limit of Liability –It refers to the maximum amount of money your insurance company is on the hook for if there is an event of damage or loss.
Limits — A limit is a maximum amount your insurance company will pay for a claim filed against a covered loss as defined in your renters insurance policy.
Peril –A peril is a specific cause for a loss or damage. Among many others, usual perils covered by renters insurance include burglary, fire, vandalism, falling objects, water-related damage and electrical surge damage.
Qualifying Event –An event that triggers your renters insurance coverage to become active. For example, a fire, water leak or theft.
Rider Endorsement –A rider (also referred to as endorsement) allows a renters insurance holder to raise the claim limit of a specific category, such as jewelry. Basically, it allows the policyholder to purchase additional coverage for personal property that may be considered by the insurance company of unusually high value.
Total Loss –A loss so large that the property or possession is considered to be of no remaining value.