If you’re renting a living space, you probably already know you should have renters insurance. In fact, some landlords require you to provide proof of insurance as a condition of your rental agreement (and remember, landlord insurance covers the structure, but renters insurance is what covers your belongings).
But what happens if you have one or more roommates — will one renters insurance policy cover all of your roommates?
The answer to this is no — one roommate’s renters policy does not automatically cover all of the roommates living in a shared space. Renters insurance is not like a homeowners insurance policy, where all family members under one roof are covered by the same policy.
Each roommate should have their own renters insurance policy. There are few exceptions to this, which are very narrowly tailored to specific circumstances. Those exceptions are typically situations such as a policyholder who is a non-parent relative acting as a guardian, or a couple cohabitating. In those narrowly defined roommate circumstances, it can make sense (and be permissible) to add a roommate to a renters insurance policy, rather than getting separate policies for each renter.
If you’re living with a roommate and splitting expenses for utilities, it might feel as though it makes sense to split the cost of your renters insurance. After all, you’re living under one roof and sharing costs, and a number of insurance companies allow policyholders to add individuals to their coverage — roommates would need to be listed on the primary renters insurance policy as additional insureds.
However, there are quite a few reasons why it isn’t a good idea to share for roommates to share a renters insurance policy.
- In some states, you can’t share a renters policy. Florida, for example, only permits spouses to share a renters insurance policy.
- When roommates share a renters insurance policy, any claims are shared. This means that if your roommate files a claim, that claim counts against your insurance record too. which could mean higher rates for you for years to come.
- A shared renters insurance policy between roommates doesn’t always accurately reflect each roommate’s risk profile. If one roommate’s belongings are thrift-store finds and hand-me-downs and the other has high-end designer goods, splitting the bill 50/50 means the thrifty roommate is subsidizing the roommate with the pricier items, because replacement costs contribute to the price of the policy.
- Renters insurance has claim limits for loss categories. Consider this: if a renters insurance policy has a claim limit of $3000 for electronics, and someone breaks into an apartment and steals both roommates’ laptops and other electronics, will splitting that $3,000 replace all of it?
- Roommates sharing a renters insurance policy can become a real headache in the event of a total loss. If everything is destroyed in a “covered peril” event, like a fire, how will you and your roommate split the claim payout? Go over this in detail with your roommate if you’re even considering a shared policy — and, if you’re planning on splitting the costs for furniture, think about how claims might be affected for those items. If one roommate has furnished a bedroom and the other has furnished everything else, splitting a claim payout in half doesn’t make sense. Conducting a home inventory of belongings and determining estimated value before acquiring insurance is always important, even more so if you’re sharing a living space with roommates.
- Shared renters insurance policies can become problematic if a liability claim arises. If you are out of town and your roommate has a massive party that causes damage to the apartment (or injury to a person) and a claim is filed, that claim is on your insurance record even though you weren’t around.
- Roommates come and go. If all of the above reasons aren’t convincing enough, there’s also the question of a roommate leaving and how the financial responsibilities for the policy will be split if your roommate leaves before the term is up.
Separate lives, separate policies
So, generally speaking, it is advisable for each roommate to have their own renters insurance policy. The only real advantage to sharing a renters insurance policy with a roommate is cost savings, but even that isn’t much. And when you consider all the risks listed above if a claim needs to be made, it just isn’t worth it.
The good news is that renters insurance is typically very affordable. The average annual cost of renters insurance is under $200 — around $16 a month.
Here are the steps you should take for renters insurance when taking on a roommate.
- You should each inventory all of your belongings. This is a critical step whenever you get insurance, and it’s particularly important when sharing living quarters. The amount and value of your possessions will have an impact on the cost of your coverage.
- If you already have an auto policy, contact your insurer to see if they offer renters insurance — you might be eligible for a discount if you bundle insurance products through the same company.
- When looking for an apartment or place to rent, consider getting some quotes ahead of time. Renters insurance costs can vary by city and neighborhood, and even by the age of the building. Newer buildings are more likely to have updated fire code fixtures, such as sprinkler systems, that could lower the cost of your renters insurance.
- As always, read your renters insurance policy, and have your roommate read theirs too. Know what types of covered perils are included, and what might be excluded. Pay close attention to category limits, like the electronics limit mentioned above. If you find that the limits aren’t enough to cover you in the case of a total loss, ask about additional coverage.
Sharing an apartment with a roommate can be a smart financial decision as you’ll both save money versus living in separate spaces, and there’s someone around to help water the plants and feed the cat when you’re out of town. (And if you do have a pet, make sure that’s covered on your policy too, in case the cat knocks over a candle and starts a fire.)
If you or your roommate are trying to determine which company to purchase renters insurance from, see which insurers other renters recommend in your state in our best renters insurance rankings.
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