Money is one of the most sensitive topics to share with your roommate(s). You can not avoid talking to them, regardless of how uncomfortable the subject makes you feel. Failure to do so could end up being terrible and may lead to the end of your relationship.
Generally, it is a good idea to share a room with someone you know, not just by name or face, but also by habits, particularly financial discipline and commitment to a cause like splitting bills. That said, if you share a room with another person or more, you may wonder whether they all need renters insurance.
Does Everyone in an Apartment Need Renters Insurance?
The simple answer is Yes. Everyone in the unit needs to own a renters insurance policy when renting an apartment. This usually covers your personal items and aids in their recovery in the event that they are damaged or stolen.
With that in mind, let’s discuss in detail renters insurance and what you need to do when sharing an apartment with a roommate.
How Renters Insurance Works
For first-time renters, do not mistake renters insurance with homeowners insurance; these are two separate insurance policies. Consider renters insurance if you do not own a home. Renters insurance is designed to protect your personal items in the event that they are stolen or destroyed by natural catastrophes, like floods or hurricanes.
Renters insurance is generally more affordable than homeowners insurance, which is a good reason why you should rent an apartment rather than own a house.
The good news is that renters insurance often covers damage to a visitor in your apartment, which is often known as liability protection.
A rule of thumb when considering whether or not you should take renters insurance is to ask yourself one question: is it possible for me to replace my household belongings if they are damaged or stolen?
If you can’t afford it, consider purchasing renters insurance to protect your valuables and protect yourself from future losses.
The average renters insurance policy costs between $120 and $190 a year. Typically, this insurance coverage covers $25,000 in personal property. Typically, the insurance cost is solely determined by the number of personal belongings you own. For example, if you rent a home, your costs may be more than if you rent an apartment with fewer belongings.
Many landlords require renters insurance. Some apartments, however, do not require renters insurance as part of the obligatory paperwork that a tenant must submit upon moving into the community.
For college students, if you live on school premises, your parents’ homeowners insurance usually covers your damages, but if you reside off-campus, you may need to purchase renters insurance.
What a Basic Renters Insurance Policy will Cover
Renters insurance is divided into three types, each of which protects you against various threats:
- Personal Property Coverage
- Loss-of-Use Coverage
- Personal Liability Coverage and Medical Expenses
Personal Property Coverage
This includes furniture, laptops, and jewelry, among other personal valuables. However, it is important to remember that the coverage will reimburse you for any damages or losses up to the policy maximum. This implies that you may have to pay the difference if the replacement exceeds your limit.
Loss-of-Use Coverage
In the event your apartment becomes inhabitable because of fire or floods, your loss of use coverage policy will cover your temporary housing.
Personal Liability Coverage and Medical Expenses
The benefits of renters insurance go beyond your belongings; it protects you against liabilities. For instance, if a visitor slips and falls in your unit or your dog bites someone, your renter’s insurance will protect you from the financial burden of paying a medical bill.
What Does Renters Insurance Not Cover?
Just because it is called renters insurance does not mean it will cover everything in your apartment. There are items your renters insurance will not cover, including, but not limited to, the following:
- Property damage caused by pests
- Items of high value
- Damages from terrorism or nuclear war
Does a Renters Insurance Policy Cover Roommates?
If your roommate is not listed on the policy, they will not be covered. However, if your roommate is named on your policy and their goods are stolen or destroyed, your policy will cover the loss up to the policy limit.
Can I Add a Roommate to My Renters Insurance Policy?
Yes, you can add your roommate to your renters insurance policy. However, this is determined by your local authority and the insurer. That said, if your insurer allows it and the state agrees, you can change the beneficiary of your coverage.
Tips for Sharing Renters Insurance with a Roommate
It is critical to comprehend the big picture when sharing renters insurance with a roommate. For example, will the shared renters insurance policy be the best option for you?
With that said, here is what you need to know:
Determine How Much You Own
Before purchasing a renters insurance policy, determine how much you own and, as a result, how much coverage you may require. You can do this by creating an inventory list and having an idea of all the items you want to get covered in your policy.
Talk to an Agent
Talking to a professional insurance agent is the best thing you can do before buying an insurance policy. An agent can examine the policy and determine if it is best shared or not.
Look for Discounts
If you want to save money, comparing insurance companies will help you find a better deal. Many insurance companies offer discounts to their first-time customers and existing customers purchasing an additional policy. You can compare the terms and potentially save more money.
For example, suppose you already have a car insurance policy (auto insurance) with an insurance company. In that case, you may be able to save money through discounts by purchasing an additional policy for your apartment at the same company.
Drawbacks of Sharing Renters Insurance
If you want to share a renters insurance policy, consider the drawbacks before proceeding. Having said that, here are some drawbacks you need to be aware of when sharing renters insurance:
Issues with Multiple Claimants
There will be difficulties filing claims when roommates share renters insurance. For instance, if your item is damaged and you need to file an insurance claim, the roommates might want to discuss what happened and how much the item costs. This may make the process more difficult than it would be if you had the renters insurance coverage on your own.
Furthermore, buying the policy will also be challenging. If you have a brand new laptop and the roommate has a second-hand laptop, sharing 50/50 may sound unfair.
Claims Limitations
The benefits of insurance will be limited if roommates share renters insurance. For example, most insurance policies have a limit on electronics covering up to $2,500, which means that if two or more individuals lose a laptop worth more than that, the insurer will only pay out $2,500.
That said, if the laptop is worth $2,200, you and the roommate will split $2,500, forcing you to pay the difference.
Your Insurance History is On the Line
If you decide to share renters insurance coverage, your insurance record will be at risk. Just like credit history and credit score, it will be used against you when seeking homeowners insurance in the future.
Final Thought
Typically, when renting an apartment, everyone needs to own renters insurance. When you consider the possibility of losing your belongings, you would instead buy a cover to protect yourself from future loss.
