While it’s not uncommon for insurance companies to allow roommates to share a renters insurance policy, it’s important that before making a decision, you weigh the pros and cons carefully.
Depending upon your situation, it may be more cost effective to fly solo on your policy.
Pro: Saving Money
Cutting costs is perhaps the biggest argument for sharing renters insurance with a roommate. Splitting a policy, just like you may split some bills, is definitely cheaper than paying for one yourself. However, how much are you actually saving?
On average, renters insurance costs about $190 a year. This is not a massive financial investment if you had to pay for it yourself. A typical policy covers about $30,000 in property and $100,000 in liability (injuries that happen in your apartment.) Will that be enough to protect both you and your roommate?
Money is also associated with some of the biggest risks in sharing a renters insurance policy with your roommate. It’s truly a double-edged sword. You may save money on the monthly premium, but what if you need to file a claim? What will that cost you?
If your policy doesn’t cover the total amount of stuff in your apartment, and everything gets damaged, you and your roommate will have to pay to replace the extra stuff out of pocket. That can get expensive.
One option is to up your coverage once you total up the value of everything you and your roommate own, but if your roommate has more expensive stuff, why should you pay more to insure it? Splitting a policy when your roommate’s stuff costs more to replace doesn’t seen like an even split.
There’s also the issue of cost to consider should your roommate want to move out early, before the policy is up for renewal. You’d get stuck footing the bill for a policy that could cost more than if you’d just gotten one for yourself at the start.
It’s best to have a plan in place to cover this scenario beforehand. Sit down with your roommate and decide what you’d do specifically about renters insurance if you stop being roommates while the policy is still active.
Con: Your permanent record
Although you’re sharing renters insurance with your roommate, whoever’s name is on the policy owns the insurance. This means that if there’s a claim, it becomes part of that person’s record.
While this may not seem like a big deal in the moment, it can have consequences down the road. Having claims on your personal insurance history can mean you pay more for future policies or end up with a cost increase when your policy is up for renewal. You become a risky customer to insure, even if the claim wasn’t for your stuff.
Before sharing renters insurance, consider this
While sharing is perfectly fine when it comes to renters insurance, it’s important to make sure everyone is able to utilize the insurance listed on the policy . Often, you must also have your name on the lease in order to be eligible for renters insurance, which means subletters shouldn’t be a part of your policy.
That being said, don’t forget to remove anybody from the policy once they’re no longer living in the apartment. Keeping someone on a policy who isn’t a resident means they’d still be issued money should a claim be filed.
Before making a decision on whether separate or together is best, consider talking to an actual insurance agent for guidance. Sharing renters insurance with your roommate is not the only option to be properly insured. You can have separate policies while living in the same apartment. In fact, it’s often the easiest choice. The important thing is going into the decision with all the information you need to understand what’s cost effective for you.