Insurance 1 (Source)

INSURANCE AND DECAY

As a new player, you have three "free deaths" before you are required to insure your items. After that, you will take decay on your clothing, armor other non-weapon items each time that you die.

PvE (player versus environment - this is what you're doing when you're hunting) deaths ALWAYS give you decay. If you aren't insured, your items will decay by 5% of their maximum condition. Insured items only decay by 1% when you die.

Each item in your inventory has condition - both a current value and a maximum value. When an item reaches 0 condition, it "breaks" and is neither repairable, nor useable. So don't let them get to 0! Have your items repaired by a tailor, weaponsmith or armorsmith before they reach 0 - and a good way to make sure they don't decay to quickly is by insuring.

Some items, such as "loot", unequippable items (junk and ornaments), or resource containers (your hide, meat and bone) don't take decay. You also won't decay if your items are insured and you are killed by another player (PvP).

Get used to insuring EVERY TIME YOU DIE - don't take that 5% decay for no reason. Insurance doesn't cost a large amount (100 credits per item) and the price of NOT insuring is far higher.