Sharing renters insurance with a roommate can save you both a few bucks in the short run, but it’s not always a good idea. While many companies will allow you to add a roommate to your policy, you’ll want to weigh the pros and cons of joint renters insurance first.
The risks of sharing renters insurance with roommates
Many insurance companies offer renters insurance to roommates, but there’s no guarantee that sharing a policy will save you money in the long run.
Say you’re sharing a policy and your roommate files a claim. Even if you had nothing to do with the incident, that claim will also go on your insurance record and stay there for up to seven years. Having a claim on your record could raise your future premiums by 20% or more, according to NerdWallet’s rate analysis.
Another potential pitfall: If your roommate is responsible for the insurance bill but misses a payment, you could find yourself uninsured, says TJ Roberts, a former insurance agent for Farm Bureau Financial Services in Mission, Kansas.
The average renters insurance policy costs $168 a year, or $84 per person when divided between two roommates, according to NerdWallet’s rate analysis. Saving $7 a month might not be worth the risks of sharing a policy.
Even among the most amicable roommates, problems can arise. For example, the total value of your combined belongings helps determine the cost of insurance. But what if one roommate has more expensive things than the other, driving up the cost of the policy? A 50-50 split on the premium wouldn’t seem fair.
In addition, roommate situations can be fluid as career or other opportunities arise. A roommate departing before the end of your policy term means you’ll likely have to reapply for insurance or update your existing policy.
“If you’re someone who moves every year or two, you might want to just have your own policy,” says Janet Ruiz, director of strategic communication at the Insurance Information Institute. “That way if you move or they move, you don’t have to redo your insurance policy.”
However, if you’re in a committed relationship with your roommate and you co-own most furniture and other belongings, sharing a policy likely makes more sense, Ruiz says.
Tips for sharing renters insurance with a roommate
If you decide to buy a renters insurance policy with a roommate, here’s what to do first.
Evaluate your roommate. Are they a stranger you just met on Craigslist or someone you’ve known for years? Can you trust them to pay their bills on time and split claims checks equitably? Think carefully before linking your finances and insurance history to someone else’s by sharing a renters policy.
Take stock of what you own. Roberts recommends taking a video inventory of everyone’s belongings, recording each room and the contents of all closets and drawers. This will help you and your roommate calculate the value of your stuff and determine how much coverage you need. In addition, having an inventory is essential to getting all of the claim money you’re entitled to if disaster strikes.
Have an honest discussion with your roommate. “What’s a good billing date for us? What’s a good budget for us? What are the things that we’re looking for as far as coverage?” Roberts says. “Those are things you definitely want to hash out.” Another question to consider if one of you has more possessions than the other: If a fire destroyed your home and everything inside, how would claim money be divided?
Talk to an agent. An insurance agent can assess how much coverage you need and talk you through the pros and cons of sharing insurance with a roommate.
Ask about bundling. Whether you share a policy or not, it’s always smart to ask an agent or insurance company about discounts. Adding renters insurance to an existing auto policy can be surprisingly affordable, thanks to bundling discounts. For example, the savings on your car insurance could be enough to minimize or even negate the cost of adding a renters policy.
“That [auto insurance] discount for some people can be like free renters insurance,” Roberts says.
Frequently asked questions
Does each roommate need renters insurance?
Renters insurance isn’t mandated by law, but some landlords require tenants to have a policy before signing the lease. While you and your roommate might be able to meet your landlord’s requirement by sharing the same renters insurance, getting your own policy may be a better idea. Learn more about how renters insurance works.
Does renters insurance cover all roommates?
Your renters insurance generally won’t cover your roommates’ things unless they’re related to you or their names are listed on your policy. Unrelated roommates should generally buy their own renters insurance.
Where can my roommate and I get affordable renters insurance?
Do I need renters insurance if my roommate and I live in a college dorm?
Maybe not. That’s because your parents’ homeowners or renters insurance policy might include coverage for your personal belongings if you’re living on campus. If not, a renters policy might be worth it.
Does each roommate need renters insurance?
Renters insurance isn’t mandated by law, but some landlords require tenants to have a policy before signing the lease. While you and your roommate might be able to meet your landlord’s requirement by sharing the same renters insurance, getting your own policy may be a better idea. Learn more about
how renters insurance works
.
Does renters insurance cover all roommates?
Your renters insurance generally won’t cover your roommates’ things unless they’re related to you or their names are listed on your policy. Unrelated roommates should generally buy their own renters insurance.
Where can my roommate and I get affordable renters insurance?
Do I need renters insurance if my roommate and I live in a college dorm?
Maybe not. That’s because your parents’
homeowners
or renters insurance policy might include coverage for your personal belongings if you’re living on campus. If not, a renters policy might be worth it.
