Should Roommates Share Renters Insurance or Get Their Own?

Posted by: TheGuarantors on September 8, 2021

Money is one of the most uncomfortable topics to talk about with roommates, especially if your roommates are also your friends. However, sharing a rental property with other people requires you to ask many proactive questions. Of those questions, this one is bound to surface: should roommates share renters insurance or buy their own? Sharing renters insurance is a cost-effective solution for roommates, but it does have the potential to cause problems. Let's dive into the details.

How Does Renters Insurance Protect Me?

As a renter, you probably have lots of personal belongings and expensive electronics that you'd hate to lose in the event of a fire or other disaster. Renters insurance protects your belongings against damage, theft, or loss by paying out a predetermined amount for each item that's lost or damaged. The average renter's insurance costs $15 per month but the price you pay will greatly depend on the state or city in which you live. For instance, if heavy rains create water damage in your apartment, or a fire breaks out in your kitchen, your policy will protect you from losing everything all at once.

Related: 5 Tips To Remember Before Buying Renters Insurance

Should Roommates Share Renters Insurance?

First off, it's important to realize that money can create problems even among the best of friends. However, there is one hard-to-miss upside of sharing renters insurance with roommates.

Saving Money

Living independently is freeing, but also comes with its unique challenges. In the bid to cut costs, you might find that sharing renters insurance with roommates can be a good start to managing your finances. You could possibly save around $100 per year on a shared insurance policy. When deciding whether to share share renter's insurance or buy your own, cutting costs is often a major upside.

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3 Things to Know Before Sharing Roommate Renters Insurance

Before deciding on sharing renters insurance with roommates, you should consider the coverage of the policy, whether you can add roommates to renters insurance, and the limits on filing claims.

1. Coverage

One policy typically covers a maximum of two individuals. If you need additional roommates to be added to your plan, they'll have to apply and purchase their own plan in order to have coverage. As long as you're over 18 and eligible to make decisions, you can get insured. It's important to make sure that you and your fellow tenants are on the same page when it comes to sharing renters insurance with roommates.

2. Add Roommate to Renters Insurance

When you add a roommate to your renters insurance policy, there’s no extra charge or premium to cover another person. This means you’ll likely save money on each annual policy because you can split the cost of a single premium.

3. Claims

If you and your roommate decide to share an insurance policy, if you were to file a claim, the payout check will be made in both of your names. This means even if the damage was only to your belongings, not your roommate's, they would still need to co-sign the check for you. This is one of the most crucial things to consider where you're asking yourself the all-important question: should roommates share renters insurance?

3 Cons of Sharing Renters Insurance with Roommates

1. Complications with Multiple People Filing Claims

When you’re sharing a place with a bunch of people, it can be really complicated to file an insurance claim. Multiple people need to agree on what happened and who's responsible for what. Even buying the policy can be more difficult because everyone’s stuff isn’t worth the same amount. As you think about how much your rent should cost, make sure to factor in all these costs too! For example, if someone has second-hand furniture in their room, while you've got brand new stuff from a pricier place like West Elm, splitting a policy 50/50 will not make sense.

2. Limits on Claims

No matter how many of your friends you get on board, there are limits on certain categories for each claim per incident. Many home insurance policies only cover up to $2,500 for electronics. This means that even if every one of you has a laptop that costs $2,000 each and all 3 burned at the same time in a fire, the policy would only pay out a max of $2,500. This amount will then have to be split amongst everyone involved. For this reason, the roommates' renters insurance that you share with your fellow tenants can actually be a disservice to your planned finances.

3. Your Insurance Record is at Stake

If your roommates file a claim for an accident they were in that involved damage to your property, it could end up on your insurance record. And while this may not be an issue now, it could cause trouble for you in years to come. After all, if you try and get homeowner’s insurance when it becomes time to settle down, any past claims submitted by your roommates might result in a higher premium or — even worse — being declined altogether. Sharing an insurance history with someone is kind of like sharing credit card details — would you trust someone so much that you'd let them have access to that?

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Wrapping Up

Should roommates share renters insurance or buy their own? The answer largely depends on how much you trust the people you're sharing your rental property with. Even then, the sticky issue of money can get in between the best of relationships. Before making a decision about sharing renters insurance with roommates, you should consider if saving $100 per year is worth the risk.

Common Questions: Sharing Renters Insurance with Roommates

Is only one renter's insurance policy allowed per property?

No. Each tenant can get their own insurance.

Does my name have to be on the lease of the house?

No.

I'm only living in my rental home for a few months. Can I still get renters insurance?

Yes.

Is renters insurance worth the expense?

If you want to be insured against natural and man-made disasters that can have a major impact on your life, then yes — absolutely!

Related: The Ultimate Guide To Renters Insurance For College Students