Pros and Cons of Sharing Renters Insurance with Roommates
If you are living with roommates, do you need to share a renters insurance policy? Many companies do allow you to share a renters insurance policy. However, it may not be the most cost effective or simple strategy.
What Does Renters Insurance Do?
The purpose of renters insurance is to provide coverage for you and your belongings. Typically, a renters insurance policy provides liability coverage and protection for your belongings. It can also include additional living expense coverage should you have to temporarily leave the place you are renting.
Items typically not covered include personal property loss and liability that exceeds your coverage limit as well as damage to the structure of the rental property.
Benefits of Sharing a Policy
By sharing a renters insurance policy with your roommates, you could save some money. Renters policies are typically very affordable and by splitting the cost between you and your roommates, each of your monthly costs could be fairly low. However, this depends on the amount of coverage you all select. If your coverage amount is really high to be able to cover all of you, it may be more cost effective to each have your own policy.
Therefore, it is important to discuss finances with your roommates beforehand to determine which coverage amount makes the most sense. Discuss the value of your personal belongings to make sure that one person’s possessions aren’t disproportionately driving up the cost of the policy.
Potential Issues with Sharing a Policy
While there may be some cost benefit to sharing a policy, often times the risks outweigh the benefits. Therefore, many companies will encourage you to each have your own renters insurance policy instead of sharing. Potential issues that could come up include:
- If you are all on the same policy, a claim filed by your roommate would end up on your insurance history. This could negatively impact you down the line. Therefore, it is better for each of you to be responsible for your own insurance history.
- Roommate arrangements are subject to change. If you are sharing a policy and your roommate needs to move because of a job change, you could run into issues with them leaving prior to the end of the policy coverage. They could not agree to pay the balance of the bill and you could be on the hook for their portion.
- If something like a fire were to happen and one person’s belongings were more damaged than the other’s, would you still split the claim money? It is important to have this discussion prior to sharing a policy as you could run into some disagreements.
Communication is Key
It is certainly possible to share a renters insurance policy with your roommates and have no issues. In order for that to happen, it is important for all tenants to discuss how finances would be handled should certain situations arise. Lay out a plan if someone were to move out early or if a disaster damaged the property. Evaluate the value of your possessions and decide if the cost should be split evenly or split based on the amounts for each person.
Having a clear plan of action can make the process much easier if you choose to share a policy. You may find in the end that it may just be easier and just as inexpensive to each have your own policy. There is no right or wrong answer, just do what is best for each of you.
Lastly, whether you share or pay on your own, always ask about discounts. Your insurance company can offer discounts if you have a bundled renters and auto insurance policy, etc. This can save you a lot of money in the long run.