Insurance is a means of protection from financial loss. It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss.
An entity which provides insurance is known as an insurer, insurance company, or insurance carrier. A person or entity who buys insurance is known as an insured or policyholder. The insurance transaction involves the insured assuming a guaranteed and known relatively small loss in the form of payment to the insurer in exchange for the insurer's promise to compensate the insured in the event of a covered loss. The loss may or may not be financial, but it must be reducible to financial terms, and must involve something in which the insured has an insurable interest established by ownership, possession, or preexisting relationship.
The insured receives a contract, called the insurance policy, which details the conditions and circumstances under which the insured will be financially compensated. The amount of money charged by the insurer to the insured for the coverage set forth in the insurance policy is called the premium. If the insured experiences a loss which is potentially covered by the insurance policy, the insured submits a claim to the insurer for processing by a claims adjuster.
Renters insurance does not require the policy owner to have a lease. For example, many college students acquire renters insurance policies to cover their personal property while they are living in dormitories. The renters insurance can also cover personal property while the goods are in storage or during travel.
What Is a Renters Insurance Policy?
Renters insurance is a form of property insurance that typically offers protection from losses due to theft, fire or windstorm. A renters insurance policy covers items such as furniture, clothing, computers, phones, jewelry, cameras and bicycles.
Take an Inventory of Your Personal Property
Before making a decision on renters insurance, take an inventory of your personal property and the estimated value of each item. Consider ways to minimize theft and damage by doing a risk assessment of the property. If there are high-value items on your personal property list, ask the insurance company about a separate rider for such unique items as jewelry or antiques.
Cost and Coverage of Renters Insurance
Renters insurance policies may vary in cost depending on the type of coverage and the amount of the deductible. Renters insurance offers either replacement cost or actual cash value coverage. The insurance premium will be higher for replacement cost coverage, since the payout for the claim is based on the current cost of a new item. As with most insurance policies, a higher deductible means lower premium costs.
Information Needed for the Application
Before applying for a renters insurance policy, gather the following information that may be required on the application form:
• Identify the location and address where the personal property will be held.
• Estimate the current value and replacement cost of the personal belongings.
• Find out if the location where the personal property is held has security alarms and fire alarms.
