Sharing tenant insurance with a roommate can save you a few dollars in the short term, but it’s not always a good idea. While many companies allow you to add a roommate to your policy, you’ll want to weigh the pros and cons of joint tenant insurance first.
The risks of sharing tenant insurance with roommates
Many insurance companies offer Tenant insurance roommates, but there’s no guarantee that sharing a policy will save you money in the long run.
For example, if you share a policy and your roommate files a claim, that claim will also appear on your insurance file and stay there for at least three years, says TJ Roberts, insurance agent for Farm Bureau Financial Services at Mission. , Kansas. . This means that you may have to pay more when it comes time to renew or if you change insurers because you would appear to be a risky customer for a claim you have nothing to do with.
Another potential pitfall: If your roommate is responsible for the insurance bill but misses a payment, you could end up uninsured, says Roberts.
The insurance policy for average tenants costs $ 168 per year, which equates to $ 84 per person when split between two roommates, according to TBEN’s rate analysis. Saving $ 7 a month might not be worth sharing a policy.
Even among the friendliest roommates, problems can arise. For example, the total value of your combined personal effects helps determine the cost of insurance. But what if one roommate has things more expensive than the other, which increases the cost of the policy? A 50-50 split of the cost does not seem fair.
Additionally, roommate situations can be fluid when career and other opportunities arise. A roommate leaving before the end of your contract term means you will likely need to reapply for insurance or update your existing policy.
“If you’re someone who moves out every year or two, you might just want to have your own policy,” says Janet Ruiz, director of strategic communications at the Insurance Information Institute. “That way, if you move or they move out, you don’t have to rewrite your insurance policy.”
However, if you’re in a committed relationship with your roommate and co-own most of the furniture and other personal effects, sharing a policy probably makes more sense, says Ruiz.
Tips for sharing tenant insurance with a roommate
If you decide to take out a tenant insurance policy with a roommate, here’s what to do first.
Evaluate your roommate. Are they a stranger you just met on Craigslist or someone you’ve known for years? Can you trust them to pay their bills on time and distribute the paychecks fairly? Think carefully before you tie your finances and insurance history to someone else’s by sharing a tenant policy.
Take stock of what you own. Roberts recommends taking a video inventory of everyone’s belongings, recording every room and the contents of all closets and drawers. This will help you and your roommate calculate the value of your belongings and determine the coverage you need. Additionally, having inventory is essential to getting all the claim amounts you are entitled to in the event of a disaster.
Have an honest discussion with your roommate. “What’s a good billing date for us? What’s a good budget for us? What are the things we are looking for in terms of coverage?” Roberts says. “These are the things you really want to find out.” Another question to consider if either of you has more property than the other: If a fire destroyed your house and everything inside, how would your claim the money be divided?
Talk to an agent. An insurance agent can assess the level of coverage you need and explain the pros and cons of sharing insurance with a roommate.
Find out about regrouping. Whether or not you share a policy, it’s always a good idea to ask an agent or insurance company for discounts. Adding tenant insurance to an existing auto policy can be surprisingly affordable, thanks to group discounts – and the savings on your auto insurance could be enough to minimize or even negate the cost of adding a tenant policy.
“This [auto insurance] The reduction for some people can be like free rental insurance, ”says Roberts.
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