Benefit Period

Glossary

Depending on the type of insurance, a benefit period can mean either the maximum amount of time that benefits will be paid, or the period of time covered by the insurance, beginning with the date of loss. Some insurance policies permit the insured to choose the length of time a benefit period is in effect, with the premiums increasing in proportion to the length of time chosen. This is usually the case with disability insurance.

Typically, the term “benefit period,” when applied to renter’s insurance, means the term of the policy; so if you have a policy that is in effect from April 2005 to April 2006, any claim for damages which occurred within that time period would be covered, subject to applicable laws.

One thing to watch out for is if you acquire an item of personal property that falls under a category on which some insurance providers limit coverage. For instance, say you rent an apartment in August, and purchase your renter’s insurance coverage based on the property you have at that time. In December of that same policy year, you receive a new laptop computer. You should not assume that your new computer is covered by your insurance policy. Your insurer might require a rider that provides additional insurance to cover it, if it has a value greater than that provided by the broad policy.

Similarly, using the same scenario, say you obtain a dog six months into your benefit period. You would need to check with your insurance company about liability coverage for dog bites, as some insurance companies will not cover certain types of dogs, and you might want to get a new policy with a company that will protect you in the event your dog bites someone.

On the other side of that coin, if you started your benefit year with an item for which you needed a rider attached to the policy, and you sell or otherwise dispose of that item prior to the expiration of the benefit period, you should check with your insurance company to see if you can get a refund of all or a portion of the premiums paid in connection with the extra coverage required for that item. As an example, say you receive a valuable fur coat from your Great Aunt Sarah’s estate at the start of your benefit period. You dutifully obtain the necessary rider to cover the coat. Three months later, you become a vegetarian and decide to donate the coat to an animal rights group. Since you no longer have the item, you no longer need the coverage. Many people forget to cancel coverage for items they no longer have. It makes no sense to continue to pay for coverage you no longer need.

If you intend to replace the item, however (as in the case of an older dog who passes on), it would be foolish to cancel the rider only to get another one right away. But you should check with your insurance agent to make sure that the rider provides enough coverage for the item. For instance, if you have a diamond ring that you trade in for one with a larger stone of better quality, it’s a good idea to ask your insurance agent if the coverage you already have is sufficient to cover the new ring.