Glossary of Renters Insurance Terms:
Actual Cash Value: Insurance under which the policyholder receives compensation equal to the cost of replacing damaged or stolen property minus an amount for depreciation for age and use. For example: A tree falls through your roof destroying your eight-year-old sofa that cost $1,200 when it was new, but is now only worth $400. With an actual cash value policy, you will receive $400.
Agent: Insurance salesperson. (a) An independent agent does not work directly for an insurance company and sells the policies of more than one insurer; (b) An exclusive agent works for one insurance company and only sells its policies.
Claim: Policyholder's request for payment by an insurer for a loss covered by a policy.
Conditions: Part of an insurance policy that states your obligations and those of your insurance company that must be followed for the policy to be in effect.
Deductible: Amount you pay out of pocket per claim or per accident. This amount is subtracted from the total amount paid by your insurer. If the claim is for $500 and your deductible is $100, you pay $100 and your company will pay $400.
Depreciation: Reduction in the value of property due to age and use.
Domestic Partners: Term used to describe unmarried couples living together.
Endorsement: Attachment to a policy which adds to or changes the contract's original terms.
Floater: Additional coverage for items not included in the basic policy such as expensive jewelry or antiques.
Insurance Department: Agency that enforces rules for the insurance business in each state. A valuable source of information about all types of insurance. The department also handles consumer inquiries and complaints.
Inventory: List of your possessions with description, serial numbers when appropriate, and information on when and where purchased.
Liability Coverage: Insurance which pays the losses of other people to whom you unintentionally or through negligence cause injury. (a) Bodily injury liability coverage pays medical costs of others and your legal defense costs if you physically harm someone; (b) Property damage liability coverage pays claims against you if you damage someone else's property.
Negligence: Failure to exercise a generally accepted level of care and caution.
Peril: Cause of loss. (Examples: fire, theft.)
Personal Property Insurance: Protects against the loss of, or damage to, possessions caused by specific perils.
Policy Period: Amount of time an insurance policy is in force.
Premium: Amount you pay for insurance coverage.
Policyholder: Person who buys insurance.
Proof Of Loss: Documents you give to the insurer to support your request for payment of a claim. The company uses these documents to determine whether and how much it will pay. (Examples include written repair estimates and police reports.)
Replacement Costs: Cost to replace property with items of like kind and quality without regard to age or condition of the original item.
Theft Limit: Highest amount an insurance company will pay on certain items that are stolen from your home. For instance, some policies have a $5,000 limit for computers. If your computer is worth more and you want to cover it for its full value, you need to purchase a floater (see glossary above).
