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Renters Insurance and Roommates — How Does That Work?

roommates unpacking boxes in new apartment

If you are currently a tenant in Alabama or Louisiana, you are smart to consider getting renters insurance. Even if you are “just starting out,” renters insurance can protect you from things like fire, theft, and legal liabilities for an affordable price. But what if you have roommates? Can you “split” a policy? And how would that work? 

Does My Insurance Company Allow “Roommate Coverage”? 

Maybe. Many insurance companies offer policies that cover roommates sharing the same rental property, but not all do. It’s important to ask if this is a possibility. Then you will want to learn all of the ins and outs before deciding if an individual policy or a policy that covers you and your roommate is the better choice. 

Could Having My Roommate on My Policy Save Me Money? 

Possibly. If you split the bill, you will save on the insurance premium, but renters insurance is economical starting out. According to the U.S. Department of Housing and Urban Development, renters’ insurance typically costs $350 a year for a $50,000 policy covering loss due to theft or damage caused by other people or natural disasters. Many policies are available for less, depending on your exact policy needs and where you live. 

The tricky scenarios happen if your roommate is not reliable about paying their share of the bill, if the two of you part ways before the policy expires, or if either of you needs to make a claim. Each of these scenarios could cost you more money than you saved upfront. 

Could Having My Roommate on My Policy Cost Me More Money? 

Yes. If your roommate files a claim, the cost of future renters insurance will go up. Also, if your roommate is the one who is supposed to pay the bill and misses a payment, it is possible that your insurance policy could be canceled. If an emergency occurs while you are uninsured, you could be out the entire cost of replacing items that were damaged or stolen. 

Another factor to consider is that the lower your credit rating, the higher your renters insurance premium may be. If you have excellent credit, but your roommate has poor credit, you could be “paying” for their poor credit. 

How Does the Insurance Company Tell Whose Stuff is Whose? 

It’s best to make a video or photo inventory for the insurance company so you can prove whose stuff is who’s if the question comes up. You will want to create a detailed list of each person’s belongings and their current market and replacement values. Even if you decide on an individual policy, it is a great idea to do a home inventory.  

Your insurance company may prefer that you send them a copy of this upfront. Either way, make sure that you have a copy in a safe place that is not your apartment or rental home (e.g., the home of a trusted family member or friend or a safe deposit box). 

Another consideration with this is how much stuff do each of you own, and what is it worth? If your roommate loves designer clothes or owns expensive electronics that you don’t, which drive up the cost of the policy, would it be fair to split the bill 50/50? Maybe you both own a similar dollar amount of stuff and are good at communicating with each other, but it is something to consider. 

What’s the Difference Between Replacement Value and Actual Value? 

Replacement value is the amount of money it would cost you to go to a store and buy an item today if it is damaged or destroyed. The actual value is like a “garage sale price” — what it is worth used, but not what it would cost you to replace it. When you are looking at the details of a potential renters insurance policy, make sure to read all the details regarding replacement value or actual (or cash) value.  

If the worst happens and your apartment burns down, do you expect to receive enough money (minus any deductible) to go out and buy new clothes, furniture, and electronics? If so, you will want to make sure you are insured for the replacement value of your belongings.  

This is an important area to communicate clearly with your roommate if you choose to share a policy. Renters insurance is economical to begin with, but being insured for the replacement value of your belongings is more expensive than being insured for the actual value. You don’t want any surprises when it comes to renters insurance. You want the peace of mind that choosing a good company and a policy that fits you will bring. 

What If One Roommate Moves Out? 

It depends upon how the policy is written. Typically, the person who stays with the rental property would remain covered, but the other roommate would need to get their name taken off of the policy if possible (or at least informally pay their share back to the other roommate).  

Unless you and your roommate are truly BFFs or significant others, change can happen quickly. What if you are sharing an apartment in Alabama or Louisiana, and then one of you gets a great job offer on the West coast or decides to go to school up North? One of you could decide to move in with a significant other or get married and want out of the policy before its expiration. Roommate situations are often fluid, but insurance policies aren’t. 

moving boxes in apartment

What’s the Bottom Line Regarding Roommates and Renters Insurance? 

Sharing a renters insurance policy with your roommate may look appealing, but there is no guarantee that it will save you money in the long run. Look at all the details and consider the possible scenarios before you choose to share a policy. An individual policy would be more expensive upfront but may prove to be simpler and better for you down the road. 

Find Affordable Renters Insurance Today in Alabama and Louisiana 

At USAgencies Insurance, we are happy to help you find an affordable renters insurance policy whether you have roommates or not. Get a quick renters insurance quote online, call us at (800) 420-3712, or visit the USAgencies location closest to you in Alabama or Louisiana.