Your personal tenant insurance dictionary

Let's be clear: if you wanted to become an insurance expert, you probably would have become a broker. Most of us aren't brokers, which leads us to ask: do I need to know what an "all-risks" policy is? What's a deductible? An approval? While you don't have to answer every insurance question to a T, it's helpful to know the basics. For example, you'll probably want to know what your renters insurance or other insurance policies cover. You might also want to familiarize yourself with your policy's exclusions.

A broker can provide you with further information. For your convenience, Panda7 has compiled a short glossary of common tenant insurance terminology.

Act of God

An "Act of God" is a violent and brutal natural event that could not have been avoided or anticipated. Examples include earthquakes, hailstorms, floods, forest fires, etc.

VRR (Actual Redemption Value)

VRR, or Actual Cash Value, is the current cost of replacing an insurable item with another item of similar manufacture or condition. All items come with base values: their original (market) value, their actual cash value, and their replacement value. The actual cash value of your kitchen space might be around $12,000, even if you renovated it for $20,000. If it were to be destroyed, replacing it could cost you $30,000.

All Risks

An "all risks" policy can cover you for all damages or losses other than those mentioned as specific exclusions in your plan.

Assessment

An appraisal of your contents, property, insured items to determine their insurable value or the amount of the loss incurred.

Broker

An independent individual, unaffiliated with any insurance company, acting according to the needs of their clients. They are generally remunerated on a commission basis.

Claim

A notice submitted to the insurance provider stating that, according to the terms of the policy, a loss may be covered.

Complete

Comprehensive insurance covers you for all damage to your vehicle except for collisions or accidents with stationary objects. Comprehensive insurance can cover risks such as theft, flooding, fire, falling objects, explosions, etc.

As with any coverage, there will be limits.

Franchise

A portion of the loss incurred that you must pay before you can receive a refund from your provider. A higher deductible will result in lower rates.

Depreciation

The gradual decrease in the value of your property over a certain period due to wear and tear and obsolescence. Your $500 television may only be worth $200 today.

Direct Agent

An insurance company that sells policies through licensed agents/employees who exclusively represent that insurance company. This is an alternative to independent brokers, who often represent several different insurance companies and work on commission.

Embezzlement

The fraudulent use of property or money entrusted to a party.

Approval

Additional coverage to include items not typically covered by a basic policy or to extend your existing limits. You may be eligible to purchase certain endorsements at an additional cost.

Exposure

Also known as a risk, an exposure is a potential hazard that could cause losses to you, your car, your business, or your home.

Floating Police

A policy that tracks goods in transit or movable property, offering coverage wherever the item is located in the world.

Grace Period

A grace period is a period of time after a policyholder's premium due date during which the outstanding premium can be paid to the provider without penalty. The policy remains in effect throughout this grace period.

Compensate

To restore a policyholder who has suffered a loss through payment, repair, or replacement.

Insurability

The probability that an individual or company will be accepted for insurance by a provider.

Degradation

Termination or "cancellation" of an insurance policy due to the policyholder's failure to pay their premium.

Defamation

A statement that decrees that an individual or party is responsible for a loss.

Market value

Named Perils

Specific risks or exposures against which your policy insures you, such as hail, windstorms, fires, etc., will be indicated in your policy.

Theft

Theft of items classified as "petty theft".

Policyholder

The individual or group of people who would otherwise be at risk of financial loss without their insured risks being covered by their policy.

Prime

The cost of insurance that you are billed on a monthly or annual basis depends on a number of factors, such as insurance history, driving record, company income, etc.

Renewal

The continuation of a policy that is about to expire. This will either take effect upon the expiration of the old policy or upon the issuance of a new policy.

Amendment

If your existing coverage limits are not sufficient, you can purchase an addendum to extend your limits.

Risk Management

Risk management involves analyzing potential exposures, classifying them according to severity, and then avoiding, reducing, or transferring the risk.

Subrogation

The rights of an insurer or company to "put themselves in the shoes" of their policyholder and bring legal action against any party that the policyholder could have sued themselves.

Umbrella Responsibility

A policy that will pay for liability losses beyond the typical limits of an auto or home insurance policy.

Valuation

The calculation or estimation of the value of an item is often determined by appraisal.