Three Things To Determine Before Sharing Renter's Insurance With A Roommate

3 March 2017
 Categories: Insurance, Blog


Sharing renter's insurance with a roommate isn't generally encouraged, but some insurers are okay with it. Some people use it as a means of reducing their insurance costs. However, ensure you settle these three issues before going down that road:

How You Will Share the Bill

To most roommates, the premier advantage of sharing renter's insurance is that they get to share the cost. However, the actual sharing is only easy if you have opted for a 50-50 split, which only makes sense if your respective properties have equal values.

How many roommates do you know who have the same (in value) assets? The answer is probably "very few." The common scenario is one person having more assets than the other. In such a case, you have to determine the respective percentage of the insurance bill each of you will pay, and this may not be easy. After all, the value of your respective assets isn't the only guiding principle because renter's insurance covers more than that; it also includes liability coverage. In short, don't agree to one policy before agreeing on how to share its costs.

How to Share Claim Settlement in The Event of a Loss

The insurance bill isn't the only thing you will share when you have a shared renter's insurance; you may also have to share a claim settlement check. This is because when you are sharing a renter's insurance policy, the insurer will write one check if your house suffers a loss.

For example, if a fire razes through your apartment, the insurer will issue a single settlement check to cover the entire loss. The settlement check will have both of your names, and it will be your responsibility to share it.

This may not be difficult if the damage is minimal or has only affected one of you. However, it becomes a headache if the damage is substantive or has resulted in a total loss (think house burned down with all belongings). This can be problematic if the coverage limit doesn't cover all your losses, and you have to determine which assets to replace and which ones to live out. Ideally, you should have an agreement in place for sharing settlement checks before signing up for a single policy.

What to Do If a Person Moves Out

The third thing you should consider is what you will do when one of you moves out. Roommates come and go all the time; even if both of you are planning to stay put for a long time, things can happen to change the status quo. For example, one of you may have to move out when they lose a job, get a better job or get a work transfer. If that happens before the renter's insurance renewal date, how will you deal with the remaining bills? This can especially be problematic if you had earlier increased your coverage to cover the exiting roommate's expensive properties, but didn't pay an upfront premium. Again, this is something to settle before buying coverage.