Renters Insurance Key Terms

Offer protection to many of your clients with renters insurance

If you work for or run an insurance company and you're considering adding rental insurance as part of your services, you'll benefit from learning renters insurance key terms. From knowing what's covered by renters insurance, known as "named perils," to telling the difference between cash value and replacement value policies, you'll be able to talk with confidence to prospective insurance buyers about renters insurance when you're familiar with many renters insurance key terms.

Named perils

A renters insurance policy covers against damages and losses caused by very specific circumstances. A list of what a renters insurance policy covers against is known as named perils.

Actual cash value

Some renters insurance policies are actual cash value policies. This means that the insurance company will replace stolen, lost or damaged possessions for a cost that deducts usual wear and tear on each item.

Replacement cost

The other type of renters insurance policy is known as replacement cost coverage. With this type of policy, items lost, stolen or damaged are replaced at the value of the item, without subtracting wear and tear.

Liability protection

Most renters insurance policies include some type of liability protection. This protects the policyholder from any possible litigation should someone be injured on the rented property and decides to sue the renter.

Theft limits

Most renters insurance policies place a limit on the value of certain items. For instance, the value of a diamond ring may be valued at more than silverware. This is known as theft limits.


When stolen, lost or damaged possessions exceed the limit provided by the theft limits in a renters insurance policy, a rider attached to the policy will extend the value of selected items. A rider allows a policyholder to increase the coverage amount of certain items to ensure the full value of the item will be replaced.

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