Can you share tenant insurance with your roommate?

Splitting expenses is common nowadays, whether it’s to share an Uber, a delivery, or housing. Many people live with roommates to bring down the cost of rent, especially with the rent for the average two-bedroom costing $2,000+. But is insurance something you can split when you have a roommate?  

Bottom line: yes, you can share tenant insurance with your roommates, but let’s explore why that might not always be the best choice. 

Tenant insurance covers everything that home insurance does except the physical property itself. You can break down tenant insurance into its three separate categories: contents insurance, third-party liability insurance, and additional living expenses.  

Contents insurance covers a person’s possessions, including all appliances not original to the unit, furniture, clothing, electronics, sports equipment, and so on. It provides coverage up to a specific dollar limit and certain items (jewelry, watches, computer software, etc.) may have special limits.  

Third-party liability insurance, or personal liability insurance, covers you for legal action taken against you because of accident taking place both inside of your home and while out and about (even on vacation!) that result in injury to others or damages to another person’s property. Having to pay for someone’s medical bills after you’ve overserved alcohol to a guest is a prime example of this. 

Additional living expenses coverage is designed for reimbursing tenants for out-of-pocket expenses incurred as a result of an insured loss forcing them to leave their home. This covers any costs beyond what would be considered typical for the period in which you have to live elsewhere.  

To enjoy a clean insurance history in the event of a loss (and not having to split your policy’s limits between you and your roommates) yes, each roommate should have their own insurance. Because tenant insurance isn’t mandatory, no roommate technically requires it, but it’s very common to have landlords ask that their tenants acquire their own insurance policies and to make it a condition of the rental agreement. Insurance is recommended either way, since the landlord’s policy won’t cover a tenant’s belongings and the tenant wouldn’t have liability or additional living expenses coverage without purchasing their own policy, first.  

Sharing tenant insurance with a roommate or roommates can save you money, since you’d be splitting the cost with multiple people. However, as far as insurance policies go, tenant insurance tends to be rather cheap – usually averaging between $20-$40/month.  

If that roommate is trustworthy and continues to make payments, avoids making claims for small issues, and is with you long term, it can be a good idea. Plus, if your landlord requires you to carry insurance, this is an effective way to ensure that you’re both covered and meeting your lease obligations.  

While there are some benefits to sharing tenant insurance with a roommate or roommates, there are plenty of disadvantages. For one, sharing a policy means sharing a claims history. Whenever your roommate submits a claim, that’ll show up on your record as well and can increase your premiums. This means even if you move out and get a new solo policy, your premiums will still be influenced by the claim your roommate previously filed.  

You’re also dependent on the payments that your roommate makes. If they were the one in charge of making payments and forgot, you could risk having your policy cancelled. At the same time, they could also cancel the policy at any point for whatever reason and leave you uninsured. 

Having a shared policy also means you share your coverage limits. IIf your unit is damaged by a fire, your possessions will be covered up to a certain dollar amount. What if all the belongings you and your roommates have exceed those limits? How would you decide whose things get a replaced and whose don’t? If you’re not the sole owner of the policy, you could land yourself in some hot water. 

Finally, roommates can come and go, and there’s no guarantee your current one will be around forever. How do you decide who gets the policy and who needs to apply for a new one? In certain cases, it may be easier for the roommate staying to keep the policy (to avoid having to update the address), but the roommate who initially purchased the policy may want to keep it and update the address when they move to a new place.  

Proceed with caution. While it’s possible to share a tenant insurance policy, it’s not advised. Make sure that you trust the roommate or roommates you’re sharing a policy with and that they’re not just someone you’ve met online. 

You may also want to record and document all of the possessions that both of you have. This can help ensure your contents insurance is adequate in covering both your and your roommate’s belongings. Be honest about payments and who’s responsible for what. 

You may also want to get an insurance broker into the mix. They can give you advice and recommend tips on ways to save on your premium. They can also help you bundle your policies if, say, you have an existing car insurance policy. Mitch’s insurance brokers can help walk you through getting a tenant insurance policy. Give us a call if you have questions.