Important Renter’s Insurance Terms To Know
- Coverage Limits
Tenants should familiarize themselves with the key terms to know when shopping for renter’s insurance. There can be a lot of confusing terminology thrown around when discussing insurance, especially for renters who might not have much experience with insurance coverage. The following are some of the most common terms affiliated with this type of policy.
Premiums are the amount renters pay every month to keep their policy active. Premiums for renter’s insurance can vary based on many different factors, such as the levels and types of coverage carried, the rental location, whether the renter owns an animal that could be a liability, whether the policy is bundled with another policy from the same company and more. Renter’s insurance typically does not have especially high premiums, so many companies allow policyholders to pay the amount all at once, monthly or on less common schedules such as every six months.
The deductible is a term for the amount of money the policyholder must pay before the insurance company will start paying out benefits. It is usually proportionate to the premium amount. Renters can often customize their plans to have a higher deductible and a lower premium, or vice versa. This is because the renter is taking on more risk so the insurance company is willing to lower the premium cost. Customers who never make a claim will not need to pay their deductible but it isn’t paid to the insurance company. The deductible amount is simply subtracted from any payout awarded. When signing up for renter’s insurance, tenants need to consider their financial situation and how much of a deductible they can afford.
Declarations is a term for the summary of an insurance policy’s coverage. It may also be called the information page or DEC page. A declarations page is often used as proof of insurance and proceeds pages outlining the policy in greater detail. It is provided when a policy is first issued, upon request and annually thereafter when the policy is renewed. The declarations page usually includes the name and rental address of the insured, the limits of the policy, the coverage types, the policy number and the period during which the policy is active, according to the International Risk Management Institute. It may also include information on how to file a claim.
Coverage outlines the types of items the policy will pay for should something happen. A landlord’s insurance rarely covers the personal possessions and liability of the tenant, so tenants are advised to get renter’s insurance for their own protection. Renter’s insurance policies cover a number of different scenarios. These policies cover a tenant’s liability if a visitor in their unit is injured and the loss of personal belongings if they are destroyed or stolen. They do not often include flood or earthquake insurance, though riders can be purchased for supplemental coverage at an additional cost.
The coverage limits specify the maximum amount the policy will pay, usually on a per-claim basis. Shoppers can usually choose the amount of coverage they want to have from several options, which will in turn affect the ultimate cost of their policy. To choose the right amount of coverage, tenants need to inventory their possessions carefully and decide on the replacement value they would need if something were to happen. Coverage limits is one of the key terms to know when shopping for renter’s insurance for this reason.
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Renters with insurance agents should ask questions to make sure they understand any additional terms that might be listed in a policy. Understanding the key terms to know when shopping for renter’s insurance equips tenants with the knowledge they need to sign up for coverage that will meet their needs.