If you don’t like to read endless definitions then you are not alone. Thousands of people have renter’s insurance policies and never read through them to fully understand them. Typically there is one page that shows coverages and then there around 15 to 30 pages of endless terms and definitions. Once you understand what the basic terms mean you will be able to understand you policy much easier.
Insurance vary on their structure an design, but the terms mean the same. The very first term to understand is personal property. Personal property is everything that you own. Another way to define personal property is to think about moving. Everything that you would place in a moving van to take to the new place is considered your personal property.
The second term to understand is personal liability. Personal liability is a coverage that will pay out in the event a person sues you due to them getting hurt on the property where you live. This coverage keeps you from having to pay out of pocket in the event of a claim against you.
The next term to know is what medical payments to others means. Medical payments to others means that your policy will pay the medical bills for anyone hurt on your property due to an accident on premises. This term usually covers each person involved that would need medical attention.
Another term to know is what replacement cost means. We all know that when you buy something like a stereo that the value drops over time. Replacement cost mean that the insurance company will replace the item lost or destroyed at what it would cost to replace it in today’s market. Without replacement cost on the policy the item could be pro-rated and very little money could be paid out; this is called depreciation.
Back up of sewer, drain, and sump pump coverage is an important term to know. This coverage means that you insurance company will replace your things if water backs up into drains or a sump pump malfunctions. With this coverage there are limits that must be chosen in a dollar amount that the insurance will pay up to.
One last term to understand is the deductible. A deductible is an amount of money the owner of the policy chooses to pay before the policy will pay out for any lose. Usually the higher the deductible the lower the premium. It is always a good idea to check with your insurer on clarification of terms and provisions of your renter’s insurance policy. This article is designed to help understand basic terms of a renter’s policy.