A term is the amount of time you’ll be covered under your renters or home insurance policy – it’s also referred to as “policy period” and “policy term” in insurance.
What is an insurance policy term?
An insurance policy term is just a fancy way of saying the time period that your insurance policy will cover you for.
When you get a renters or homeowners insurance policy, you and your stuff will be protected from damages caused by ‘named perils.’ However, this coverage won’t last your entire lifetime. Instead, you’ll only be covered during the term laid out in your policy.
After your term is over, you’ll have to renew your policy in order to stay covered. That means if you make a claim before the term starts, or after it expires, your insurer won’t be able to approve the claim.
Insurance policy terms FAQ
Q: How long is the typical term for renters and homeowners insurance policies?
A: Usually 12 months.
Different types of insurance policies offer different term durations (for example, life insurance is, well, for life!), but typically, home insurance lasts for around one year.
Q: Can I cancel my insurance policy before my term is over?
A: You sure can!
We can’t speak for other companies, but here’s how it works at Lemonade:
If you need to cancel your policy for any reason during your policy term, you can do it totally for free, and we’ll refund you for the unused portion of your premium.
So no worries, your insurance policy term doesn’t mean you’re bound to your insurance policy for that period of time. It just represents the length of time you can have an active insurance policy before renewing it.
Insurance policy term example
Picture this: You finally move into your new digs. This can only mean one thing – time for a shiny new renters insurance policy. Yay!
You fill out the necessary forms or enter your info on an app, and get renters insurance. The date is June 19th, 2018, and you decide to activate your insurance policy that very day.
In this case, the term of your renters insurance will be from June 19th, 2018, until June 19th, 2019. So on 06/19/19, your term will be over, and it’ll be time to renew your insurance policy. (Don’t worry, it shouldn’t take too long.)
Now, time for a different scenario:
Imagine you plan ahead, and decide to get your insurance policy a month before you move into your new apartment (kudos!). You go through the steps, and decide to create a future start date – know as an effective date in insurance lingo – instead of activating it that day. So on May 19th, you decide to set your policy to start on June 19th.
In this case, your insurance policy term will be the same as it would have been in the first example. Since your policy will become active on June 19th, 2018, the term will last until June 19th, 2019. Then – you know the drill – time to renew your policy!