If you are unfamiliar with renters insurance, the terminology can be a bit confusing. But there is no need to stay in the dark with our quick renters insurance terminology guide. Here are the most common terms you should know plus a few quick questions to keep in mind when speaking with the GEICO Property Agency about a renters insurance quote.
Term: Actual Cash Value. The actual cash value is what your item is worth today. For example, if you purchased a computer for $2,000 seven years ago then it has "depreciated" or gone down in value. After all, how many people really want a seven-year-old computer? No matter how good it originally was, you have put wear-and-tear in it and computers today are much better than seven years ago. Therefore it is now worth much less than what you originally paid for it. If the computer is destroyed, insurance would cover what the computer is worth today.
Bonus tip: Sometimes items are worth more to the individual than the actual cash or depreciated value. In the example above, even if the computer is old, if you use it to study for classes in college then it could still be worth much more to you because you need the computer on a regular basis. In this case you might need to purchase "replacement cost coverage." Replacement cost coverage will pay to replace the computer, not just the actual cash value.
Term: Policy Period. This is the amount of time the insurance policy is in effect. Make sure you understand when the policy begins and ends.
Bonus tip: Don't risk a lapse in coverage. Set up automatic payments to pay your insurance on time.
Term: Liability Insurance. Liability coverage pays a loss if you unintentionally hurt or cause someone harm.
Bonus tip: Don't assume the landlord or property owner provides all the liability coverage. If your pet, child or even you harm or cause damage to someone else's property or person then you could be held liable. Always keep liability coverage for yourself and family.
The above-listed tips are for informational use only. Refer to your insurance policy contract for specific information regarding your coverages and for actual terms, conditions and exclusions. The above statements are general in nature and may or may not reflect the actual terms of your insurance policy.