At a young age, some of us look forward to moving out on our own–well, kinda. We usually start out having a roommate. Living with a friend can be quite an exciting situation. First of all, they provide company. Best of all, they pay half of your bills.
What’s your first priority when moving into your house? You may think of decorations, or how you’re going to arrange your living room. It’s not likely that you’ll be considering your renter’s insurance. There are some important legalities that go into your renter’s insurance.
Do not just assume that as long as one roommate has renters insurance, the other is covered if something happens. This is not the case. Your roommate is not covered if he/she is not specifically listed on the policy. Renters insurance basically covers liability, loss of use, and personal property. The policy specifically excludes your roommate from coverage.
The total premium that is calculated for your renter’s insurance is based on the likelihood that you’ll have a claim. The likelihood that you’ll need to file a claim increases with another resident living in your home. Because you’re more likely to have a claim, the premium will increase with an additional resident. The insurance company excludes your roommate because the price they charged for your premium is not sufficient for double the risk.
However, adding your roommate as an additional insured is not always a good idea either. Say you have a policy with your roommate as an additional insured. Your roommate has a friend over, and that friend is injured due to your roommate’s negligence. Now he/she must file a claim. That claim is reported to the insurance company, and it will now be on your record as well. This can cause your renter’s or future homeowners insurance to be more expensive.
Take into consideration that your roommate could do something that was not your fault, and you would still be held accountable for this action. You could be costing yourself hundreds of dollars extra on future policies by sharing a renters insurance policy. It is highly recommended that both you and your roommate have separate renters insurance policies.