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Click on any letter to view terms and conditions. Review all of the renters insurance policy terms to ensure you fully understand your renters insurance policy.


Actual Cash Value (ACV)

Also called market value or fair market value, actual cash value represents the present property cash value of an item. To calculate an insured item's actual cash value, insurers take the replacement cost and subtract depreciation. Actual cash value in renters insurance property coverage is less expensive than full replacement cost because the payout on a claim is lower. The majority of renters insurance plans offer actual cash value coverage in a default property policy.

Additional Living Expenses

Extra charges covered by a renters insurance plan above and beyond expenses normally paid in most circumstances. Additional living expenses may be paid out to insured renters who need temporary relocation after a loss has made their rented home uninhabitable while repairs are being done or investigations completed. Additional living expenses can include hotel or motel fees as well as restaurant bills and other related expenses.


An employee of an insurance company who evaluates claims and completes an assessment of damages caused in a loss. Adjusters make the determination to accept or reject claims and set payout levels for renters insurance provides.

Administrative Expense Charge

An amount of money charged by the insurer to the policy holder to pay the costs of administering the renters insurance policy.

Adverse Selection

The statistical tendency for those with a higher exposure to risk to obtain higher levels of coverage than those with lower exposure. Adverse selection ends up working to concentrate risks borne by providers rather than spreading it out evenly across their entire customer base.

Affinity Sales

The practice of selling insurance policies through groups, associations, and other organizations. Examples could include employers, civic groups, clubs and other groups. Affinity sales can offer renters insurance consumers opportunities to access reduced rates for their policies.


An insurance salesperson who sells and services insurance policies. Agents are the ones who deal with customers directly when they purchase coverage through an agency, and also the ones they typically work with when they have questions or concerns about their coverage. An exclusive agent (also called a captive agent) only represents one insurance company.


An attachment to a policy that revises or modifies certain policy guidelines or benefits of coverage for the covered policy holder.

Annual Limits

The maximum dollar amount a renters insurance policy will pay out in any given year.


 In general terms, an appraisal is an evaluation to determine the monetary value of an object. As it pertains specifically to renters insurance, appraisal can refer to an expert assessment of the insurable value of a piece of property, or it can mean a determination of the financial amount of a loss.

Approved Charge

The dollar amount on which a renters insurance provider bases its payments and a policy holder's co payments.


A decision made by objective experts as to the monetary value of a loss or the extent of damage in a disputed claim. In an arbitration hearing the entire proceeding is usually less formal than a court setting, but the arbitrator's decision is binding nonetheless. This is an informal alternative to court litigation with a judge and/or jury, and can be less costly to both the insurance provider and the policy holder.

Benefit Maximum

The most a renters insurance provider will pay for a specified loss or a covered service under the terms of a policy agreement between the insurer and a covered policy holder. The benefit maximum may be expressed either as a period of time, a monetary figure, or a percentage of the approved amount. Depending on the type of coverage, the benefits may be paid either to the covered policy holder or to a third party.


A temporary insurance contract that provides the policy holder with proof of insurance coverage until a permanent policy is available from the provider. A binder is always subject to the payment of the premium, meaning it can be voided due to non payment.


An insurance salesperson who works directly with agents and insurance providers to locate suitable insurance coverage for consumers. A broker may oversee one or several agents, and may have access to multiple providers, giving insurance consumers a better chance to get connected with a company that can save them some money off their insurance premium.


Termination of an insurance policy before its expiration date. There are multiple reasons why cancellation could occur in a renters insurance policy. One reason might be nonpayment of premiums; another could be fraud.


A dishonest practice by renters insurance agents they concoct in order to increase their own personal income. Churning refers to a method by which agents repeatedly encourage their clients to switch insurance providers and to replace their existing policies with new ones every time they are set to expire. The most common reason for this practice is that commissions earned by agents are often higher in the first year than they are in subsequent years of enrollment for their customers.


A demand on the part of an insured policy holder against a loss covered by their renters insurance policy. Opening a claim means getting the process started by which an insurance company investigates the circumstances surrounding the loss in question, makes an assessment of the validity of the claim, and determines the payout to be sent to the policy holder.

CLUE Report

An acronym for Comprehensive Loss Underwriting Exchange, which keeps track of insurance claims history.


The specific language in a renters insurance policy that specify your rights and responsibilities as a policy holder, as well as those of the insurance company you have contracted with for coverage. If either party fails to meet the conditions of the policy, it may be voided at any time. It is vital for policy holders to understand the conditions of their plans, so that they do not do anything that could compromise their financial investment in the policy.


In general, coverage is a synonym for insurance. As it pertains to renters insurance, coverage is a word indicating the specific financial amount of protection the insurance policy provides. Coverage also has another corollary meaning in insurance terms. It can refer to the type of protection as well as the financial amount.

Covered Services and Supplies

In most cases, the insured will receive some kind of written notice describing the services and supplies covered and reimbursable under a particular insurance plan. This same written notice usually will also specify those services and supplies that are not covered under said policy.

Declarations Page

Located on the front page of the policy, the declarations page contains basic information such as the name of the insurance company providing the policy, the policy number, the types of coverage included in the policy, and elected deductibles.


In a renters insurance policy, the deductible is the amount of money the policy holder agrees to pay out of pocket toward any covered loss before the insurance provider pays the excess up to the limits of the policy. The deductible levels of a renters insurance plan influence the policy holder's ability to make small claims. The higher the deductible, the more a policy becomes pretty well catastrophic in nature and not set aside for dealing with minor losses. High deductibles keep premiums low, but also cost policy holders more out of pocket when they do file claims.


Generally speaking, depreciation is the decrease in financial value of property due to age, wear and tear, or any other reason. In renters insurance, depreciation is a very important source of the cost of a policy. The personal property portion of a renters insurance plan can be figured based on one of two methods, ACV or replacement coverage. ACV takes depreciation into account, producing lesser coverage for a cheaper premium. Replacement coverage ignores depreciation and gives insured policy holders better coverage at a higher premium.

Effective Date

The date an insurance policy begins. The effective date is the first date your renters insurance policy is active and in force.


An endorsement is a specific amendment to an insurance policy that adds coverage not ordinarily included in the terms of a standard policy. A specific endorsement will improve the scope of coverage for the policy holder, but will also increase rates. Certain exclusions from standard policies can be added as endorsements, such as flood or earthquake coverage.


Event types or specific areas of loss that a standard renters insurance policy does not cover. Examples of common exclusions include hurricane, flood, earthquake, and tornado coverage. In some cases in geographical areas prone to these types of events, renters can add riders for coverage insuring them against these exclusions, or get separate policies granting them this coverage.

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Grace Period

The length of time, specified in the language of the written policy, during which an insured policy holder can repay an overdue balance against the policy premium while still keeping their renters insurance coverage in force during that period of time. In many cases an insurance provider sets their grace period at somewhere around a month, either 30 or 31 days, though this is not always the case.

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The person for whom an insurance policy is written. In a renters insurance policy, the named insured is the person living at the rented dwelling named in the policy, who is usually listed on the lease at that dwelling.

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Lapsed Policy

A policy that has been terminated because of failure to pay the policy premium. Lapsed policies are considered to have been voluntarily terminated by the policy holder owing to their failure to keep up with premium payments. Lapsed policies not only lead to a renter not having any insurance coverage at the moment, but they also end up costing consumers more money when they try to sign on for new coverage. For this reason it is very important to try to avoid coverage lapses (in all policies and not just in renters insurance plans).


A liability in general terms is any legally binding obligation. In insurance terms, liability refers to a civil or other judgment decreeing that a certain policy holder is financially responsible for a situation, whether it involves an injury or property damage to others.

Liability Coverage

In general, insurance against bodily injury and property damage caused by the policy holder or otherwise considered the policy holder's responsibility. In renters insurance coverage, liability insurance can protect a single insured policy holder or a whole household depending on the terms of the policy. Liability coverage can protect a renter from crippling out of pocket expenses after a civil liability judgment has been passed.

Limit of Liability

This limit is the maximum financial level of monetary damages an insured policy holder would have to pay in the event of a loss.


In a renters insurance policy, limitations are either the conditions under which benefits are not payable or situations when maximum payouts have been reached and no more coverage is available for insured policy holders. Another limitation exists in situations where claims are not large enough to warrant payout because the loss does not exceed the elected deductible for that part of the policy.


The maximum financial amount an insurance provider will pay out for a covered loss. The limits of renters insurance are determined at the policy inception. There are certain default levels that many renters opt for, but these limits are adjustable and any policy holder can choose to increase them for an additional premium charge.

Material Misrepresentation

More than just an incidental or minor misstatement in an insurance application form. In most cases material misrepresentation involves dishonesty on the part of insured policy holders. One common example of material misrepresentation occurs when policy applicants hold back information about themselves that they know may compromise their ability to get approved for a policy or that may affect the affordability of such a policy.


Somewhat analogous to liability, negligence is a failure to act within a generally acceptable range of care or caution in a way that ends up resulting in some sort of injury or damage to a third party. Liability protection in a renters insurance policy protects covered policy holders from directly taking on the full financial cost of payments for medical care and property repairs as a result of their negligence.

Non renewal

The willful termination of the renters insurance policy by the insurance provider at its expiration date. Non renewal is a decision by the insurer not to take on a policy holder for another year or for another covered policy period. It is different from cancellation because in choosing not to renew a client, an insurer is simply allowing the remaining policy period to play out rather than dropping that client and dealing with unpaid or refundable premiums.


In general, an occurrence is simply an event of some sort. In insurance in particular, an occurrence is an event leading to a claim. An example of an occurrence in renters insurance is a fire sweeping through an apartment complex and causing significant property loss.


A synonym for premium.


The monetary charge a renters insurance policy holder agrees to pay in exchange for the protection promised in the terms of the agreement by the insurance provider. A premium is influenced by many factors, among which are the level of coverage, deductibles, and the geographical region in which the policy holder resides.

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Reasonable and Customary Fees

An insurer makes an evaluation when a bill is submitted for whether or not the charges proposed are reasonable and customary for the type of work being performed. What might be considered reasonable and customary by an insurer might depend on a number of things. The specific service being provided, the qualifications and skill level of the contractor or worker performing the service, the geographic area in which the work is being done, and other variables can be taken into account. Insurance providers maintain large databases of information to help them determine what is reasonable and customary in any given circumstance.


The resumption of coverage under a renters insurance policy that has seen a lapse in coverage due to nonpayment of the premium past the end of the grace period. Reinstatement can occur after all past due fees and any penalties have been taken care of by the policy holder. Alternately, reinstatement could also refer to resumption of coverage that had been suspended erroneously, or resumption of coverage in a policy that was under dispute after the dispute has been resolved. In these latter two cases, reinstatement restores the continuous nature of coverage and no lapse is considered to have transpired.

Replacement Cost on Contents

A specific form of renters insurance personal property protection that insures for actual replacement cost rather than based on any calculation of depreciated actual cash value or market value. Replacement cost (also called full replacement or guaranteed replacement cost) is costlier than actual cash value property coverage, but provides superior financial protection for policy holders following a loss. Replacement cost is often a special endorsement on a policy, as actual cash value more often than not is the default offering on a standard renters insurance plan.


In rescission, the renters insurance provider voids the policy all the way back to the date of effective coverage and returns any paid premiums back to the policy holder. Rescission effectively means no coverage ever existed at all, at least in practical terms.

Rider (Endorsement)

A rider is a synonym for an endorsement. A rider is a specific amendment to a renters insurance policy that adds coverage not included in the standard terms of that policy. Riders usually deal with areas of coverage excluded from standard offerings, and as such they improve coverage but also increase premium costs. Policy holders in certain areas can get riders for things like flood coverage.


The likelihood of a claim event transpiring while a policy holder is insured. Renters insurance companies assume this risk and the corollary likelihood of paying out for a claim in exchange for the monetary fees paid out in the form of policy premiums. Risk is the basic principle guiding all insurance companies. Risk assumption and the minimizing of risk are the primary areas of focus for insurance research.

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An employee of an insurance company who determines what insurance risks will be tolerated, and on what terms they will be accepted. Underwriters set pricing and determine eligibility for policies.


The process undertaken by certain individuals in the employ of an insurance company (underwriters) to determine applicants' eligibility and pricing for insurance policies and programs.

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