Many companies permit it, but there’s no guarantee it’ll save you money in the long run.
Although sharing renters insurance can save you money in the short-term, it is not always a good idea. Although many insurance companies will allow you add a roommate, it’s important to weigh the pros and disadvantages of having joint renters insurance.
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.
TJ Roberts, an insurance agent at Farm Bureau Financial Services in Mission (Kansas), says that if you share a policy with a roommate and they file a claim, it will be added to your insurance record. It will stay there for at most three years. This could mean that you may have to pay more if your insurance company changes or you will be considered a risky customer because of a claim that you did not make.
Roberts warns that another potential problem is if your roommate fails to pay the insurance bill.
The average renters insurance policy costs $168 a year, which works out to $84 per person when divided between two roommates, according to NerdWallet’s rate analysis. Sharing a policy might be more cost-effective than the $7 savings you could make.
Even the most friendly roommates can have problems. The total value of all your belongings will determine how much insurance you need. What if one of your roommates has more expensive items than the other? This could increase the policy’s cost. It wouldn’t be fair to split the cost 50-50.
Roommate relationships can also change as new opportunities or career paths open. If your roommate leaves before the end your policy term, you will likely need to reapply or update your current policy.
Janet Ruiz (director of strategic communication, Insurance Information Institute) says that if you move every year or so, it might be a good idea to have your own policy. “This way, if you or your family move, you don’t have to rewrite your insurance policy.”
Ruiz states that if you are in a committed relationship and co-own most of your furniture, it makes sense to share a policy.
Tips to share renters insurance with a roommate
Here’s how to make sure you and your roommate are both covered by renters insurance.
Assess your roommate. Is this someone you have known for years or a stranger that you met on Craigslist? Are you able to trust them to pay their bills on-time and split the claims checks fairly? If you are considering sharing a renters insurance policy, think carefully about how your financial and insurance history will be linked to that of another person.
Make a list of everything you own. Roberts suggests taking a video inventory and recording every room, as well as the contents of drawers and closets. This will allow you and your roommate to determine the worth of your belongings and how much coverage you require. It is also important to have an inventory in order to get all the claim money you are entitled to in case of disaster.
Talk openly with your roommate. What’s a fair billing date? What is a reasonable budget? What coverage are we looking for? Roberts agrees. These are issues you will want to discuss. Consider another question if you have more possessions than your partner: How would money be split if your home was destroyed by fire?
Talk to an agent. Talk to an agent about the benefits and drawbacks of sharing insurance with roommates.
Ask about bundling. It doesn’t matter if you have a shared policy, it is smart to inquire about bundling. Adding renters insurance to an existing auto policy can be surprisingly affordable, thanks to bundling discounts — and the savings on your car insurance could be enough to minimize or even negate the cost of adding a renters policy.
Roberts states that “The [auto insurance] discount can be like renters insurance for some people.”