Should you share tenant insurance with roommates?
The short answer is no – the savings just aren't worth the risks. Get an affordable tenant insurance quote with us today to see how much (or how little) you could be paying for your very own policy.
Ratehub.ca
With files from Tyler Wade.
This post was originally published on December 9, 2020, and was updated on April 11, 2024.
Yes, you can share tenant insurance with roommates, but at what cost? While the average cost of renters insurance fluctuates on location, apartment type, and the cost of your belongings, it’s probably still less than ordering delivery through UberEats.
You can share Uber Eats orders with roommates; everyone can pitch in and split the cost, but who gets the leftovers? Therein lies the problem with sharing insurance with roommates.
Key takeaways on tenant insurance and roommates
- Tenant insurance can cover various risks associated with renting, such as loss or damage to your belongings, third-party liability claims, and expenses related to temporary relocation.
- If you're renting with others, you should have your own coverage – separate from roommates. The risks just aren't worth the small savings. For instance, if your roommate makes a claim, it can impact your claims history which can increase premiums on future policies you wish to purchase.
- If you do choose to share a policy with your roommate (which again, isn't recommended), be sure to do your due diligence and follow our checklist below to limit any potential headaches, disputes, and financial repercussions in the future.
What does tenant insurance cover anyway?
A standard tenant insurance policy comes with three types of coverages: contents insurance, additional living expenses, and third-party liability.
Contents insurance – First and foremost, tenant insurance covers your valuable possessions against loss and damage from various risks, such as a house fire (this is called contents insurance). You can add a roommate to your policy, but if you fail to up the content limits, you could be out thousands of dollars trying to make up for the shared losses.
Additional living expenses – Next, additional living expenses is a fancy way of saying your insurance company will pay for you to live elsewhere (think hotel, plus various expenses like food, storage, and laundry) while your apartment is being repaired following a claim. So, if hurricane winds smash through a window and whipping rains pour in damaging your stuff, your insurance company will cover the costs of living elsewhere. Without your own policy (and depending on your roommate), you could be paying for your own accommodation or couch surfing with friends and family (if that’s even an option).
Third-party liability – Lastly, liability insurance ensures that anyone who suffers an injury entering or visiting your pad gets their medical expenses paid for by your insurer, not you. Suppose your roommate’s dog bites a visitor’s hand, causing irreparable damage, or a visitor slips down icy steps. In that case, they could sue you for thousands of dollars, if not hundreds of thousands. With your own policy, concerns about who’s paying for what are nil. Plus, it can also cover claims of property damage from a third party, if for example, your landlord sues you for ruining the rental unit.
Does each tenant need renters insurance?
If you want a hassle-free claims experience, a clean insurance history, and a guarantee that you’ll be covered following a flood, fire, or other risks, then yes, each tenant should have their own policy.
Tenant insurance isn’t mandatory (unless the landlord stipulates it in the lease), so technically, no one needs it. But remember, landlord insurance does not protect the tenant or their belongings.
The risks of sharing tenant insurance with roommates
While sharing tenant insurance can save you a few dollars each month, here are a few risks that can come with doing so:
Shared claims history – If your roommate files a claim, it shows up on your record too which could increase your premiums in the foreseeable future (for tenant insurance, condo insurance, and home insurance). And did you know renters insurance covers your stuff while you’re travelling? Will your roommate let you know they made a claim abroad?
Dependent on roommate payments – Suppose your roommate is in charge of paying the monthly premium and forgets. In that case, you could both be left uninsured (and deemed higher risk in future applications). And with their name on the policy, it means your roommate can cancel the policy at any time without notifying you.
Shared contents limit – Splitting the bill 50-50 makes sense until it's time to make a claim. Depending on your policy and your contents insurance limit, you may only be covered for $2,500 worth of electronics. So who’s getting their laptop replaced and who isn’t? Does your couch get replaced or your roommate's bed?
Roommates come and go – Roommates can come and go like the weather. Who takes the policy with them while the other applies for a new one? It can be a hassle to figure this out each time someone moves in or out.
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Tips for sharing renters insurance with roommates
Okay, so you’re not sold – you’d rather split the $15 monthly charge. I get it. Especially if you’re a student looking for tenant insurance and cash is tight. If so, here are a few tips, with the most important factor being clear and transparent communication on how it all works.
Know your roommate – Can you trust them? Sharing financial information and insurance history can be risky. If you just met them on Facebook, make sure you do the due diligence to screen properly.
Record everything – Whether you do it with an app, a shared doc, or even a video – walkthrough each room and evaluate each item’s worth. Open drawers and dressers, plus take extra time around electronics, furniture, and other expensive items. Do this with your roommate to keep track of a contents inventory. That way, you’ll know how much contents insurance you need in total and have proof if your insurer asks,
Open and honest communication – Who’s paying the bills? What happens if we need to make a claim? If a fire breaks out, how are you going to split the claim money? Make sure everyone is on the same page.
Get an insurance broker – A broker can walk you through the details of the policy and answer any other questions you may have. They can also save you money. If you have car insurance, they can also help you bundle the two policies together for some savings.
If you're a student, call your parents – If you live in a college dorm, your parent's individual homeowner's insurance policies likely have some form of limited coverage. Ask them to double-check with the insurer to find out what's covered and what isn't.
Create a prenup – Sharing with your partner? It may be more important to put it all in writing than not. If you want respect, be respectful. If there isn’t any, maybe it wasn’t meant to be.
The bottom line
Does everyone need their own renters insurance policy? Yes, it’s much better than the ensuing headaches and stresses it could cause without individual policies. If you’re going to share it anyway, do so carefully with the help of a professional. Also, be sure to compare renters insurance with us today. Not only will we give you the best price, but we’ll also connect you with a qualified advisor who can help answer the tricky questions.