While many roommates help share the cost of rent and utilities, there is one bill that should not be shared- renters insurance.
Renters insurance covers possessions inside the home that are owned by each individual. In the eyes of an insurance company, your possessions and your roommates possessions are two totally different things. That being said, each roommate should have their own coverage for their own things.
There are many reasons why a separate policy for tenants is integral.
1. You are responsible for the things you own
Everybody has belongings of different value. Would it really make sense to get $30,000 worth of personal property and split it amongst three people? Chances of each of you owning exactly $10,000 worth of stuff, is pretty slim. Also, if one roommate owns higher valued items, should the others have to pay for the expensive renters insurance? I don't think so...
You may also be wondering, if one roommate has coverage, can their policy cover a roommate's loss? For the one that has coverage, do they really want to put a claim on your record for another's loss? Having numerous claims on record will eventually lead to paying higher rates since you are viewed as a greater risk.
2. Keeping your policy up to date
People are always on the lookout for the next hottest item. If there are changes in your belongings or your roommates, such as a new laptop or camera, you need to inform your insurance company and be prepared for the rates to change. It makes more sense to have your own policy so that you don't have to keep track of your roommate's purchases and belongings.
3. Fair allocation of coverage in the event of a loss
The underlying point of having a policy is to to be covered in the event of a loss. So, what would happen if a fire occurs and multiple tenants are listed on a policy? It would be difficult for an insurance company to determine how to fairly allocate the amount of coverage to each insured. Even worse, receiving a $30,000 check to divvy up could be disastrous.
4. Settlement of liability claims
If a lawsuit is brought against more than one of the named insureds, how is the liability coverage limit of the policy going to be allocated? A typical policy has $500,000 worth of liability coverage, so if you have two roommates, does each get 1/3 worth of coverage? This is the main reason why many insurance companies are not willing to have unrelated tenants on one policy as it becomes a claims settlement nightmare.
Sharing a policy may save premium dollars, but for the reasons mentioned above, it is wiser to have your own. Take an inventory of your personal property, and weigh out the pro's and con's to determine what is best for you.
