Does Each Tenant Need Renters Insurance?

Sharing a policy with your roommate can cause more headaches than what it’s worth because you’ll need to get more coverage to ensure you’re properly protected, which will increase your monthly premiums. But the real kicker is the fact that any claim filed — whether it’s by you or your roommate — will go on both of your insurance records, which will impact your insurance score.

Some states and insurance companies do the deep thinking for you, as they have stipulations that don’t allow roommates to be on the same renters insurance. Let’s take a look at what kind of coverage — and issues — you can expect with both.

Renters insurance works with roommates in one of two ways: each renter can get their own separate policy or they can both be on the same policy. In both scenarios, each roommate who’s on the policy will be covered. While each sounds easy enough, you should strongly consider each getting your own policy.

Renters insurance typically costs $15 to $25 per month, depending on which state you live in. Renters in Florida face more perils than those in Illinois, so Floridians will pay toward the upper tier of the pricing spectrum.

Either way, getting renters insurance is pretty cheap. For the low monthly payment, you’ll get three types of coverage: personal property, liability and loss of use.

Personal property coverage extends protection to your personal belongings in the event they’re damaged or destroyed by a covered peril. These items include, but are not limited to, your furniture, TV, personal computers and electronics, clothes and tools you keep on the property.

Coverage can be purchased as replacement cost, which will reimburse you the exact dollar amount you paid for an item, or as actual cash value, which will factor in depreciation to the item to calculate a current worth before it was damaged or destroyed.

You need as much personal property coverage as your belongings are worth to ensure everything is sufficiently covered. So if you have $20,000 in personal belongings, you’ll need $20,000 worth of personal property coverage. Any less would leave you vulnerable and any more would mean you may be overpaying for too much coverage.

Liability coverage kicks in if someone is injured on your property and you’re found liable, if your dog bites someone on or off your property, or if you accidentally cause damage to someone else’s property.

A standard renters policy comes equipped with $100,000 in liability coverage, which should be enough for the average renter. But if your rental house has an attractive nuisance on the property, such as a swimming pool or trampoline, you may want to opt for more liability coverage. Similarly, dog owners and high net-worth individuals should consider more liability coverage as well.

Loss of use coverage is the last, and often overlooked, portion of a renters policy. It’s designed to reimburse you for extra living expenses and a temporary rental unit or hotel of equivalent value if your current rental home sustains extensive damage from a covered peril and you’re forced to move out while it’s being repaired or rebuilt.

Even if the home you’re renting burns down, you may still be on the hook for rent. Although you can fight this in court and likely win, the easier route is to tap into your loss of use coverage for immediate help. It’s better than having to crash on your friend’s couch and putting your entire life on hold.

A general rule of thumb for renters is to get three months’ worth of expenses for your loss of use coverage. So if your rent and general living expenses total $2,000 per month, you’ll want at least $6,000 in loss of use coverage.

Plus, two people will undoubtedly need more coverage than one and all of those coverages are needed per person. So if you add a roommate onto your policy, the new renters policy should be $40,000 in personal property coverage, $200,000 in liability coverage and $12,000 in coverage for loss of use coverage.

While combining policies may save you a few dollars in the short term, it can cost you a whole lot more in terms of your insurance score because shared policies also means shared claims. That’s why we always recommend each roommate secure their own renters insurance policy. But for a comprehensive look at what you can expect, let’s take a look at some real-world pros and cons of each.

If a peril occurs in your home, such as a burst pipe or electrical fire, you’ll need to file a renters insurance claim. If the water from the burst pipe or flames from the electrical fire occur in your roommate’s room, leaving all your personal belongings intact, having your own policy would help you. That’s because you wouldn’t have to file a claim because none of your belongings were damaged.

If you each have your own policy, your claims will be separate — even if you both have to file. But that’s important because your claims history is a fraction of what dictates your insurance premiums. The more claims you file, and the more money they’re worth, the higher your insurance premiums.

Even if your entire home burned down and you each need to file a claim, filing separately would mean each claim is worth about half. So instead of filing a $40,000 personal property claim for both of your belongings, you’d each need to file a $20,000 claim instead.

But that brings about the next point to enroll in solo renters insurance. If you have $10,000 worth of personal belongings and your roommate, who’s a bit of a shopaholic, has $30,000 worth of belongings, you shouldn’t be paying the same amount for coverage. And if your roommate has a dog but you don’t, you don’t need to be taking on the risks that their dog won’t bite someone either.

For this one, the only con is that you may pay slightly more to get your own policy. But we’re talking about somewhere in the ballpark of $5 per month or $60 per year, so we’d say skip that extra cup of coffee each month and get your own policy.

The only way a joint renters insurance policy may make sense is if your roommate is also your significant other, you share the same room and you already split the bills and living expenses down the middle. In that scenario, it’s highly unlikely their belongings will get damaged and yours won’t since they’re likely kept in the same place.

However, your state and insurer must allow joint policies and you must each be on the rental lease agreement. Even then, things can get a bit sticky if you suddenly break up and one person moves out. It’s extremely difficult to remove someone from a renters policy. If you’re married or engaged, then it may make sense to enroll in a joint renters insurance policy to save some money.

Adding someone to a renters policy is easy. Simply call your insurance agent and, if your state and insurer allow it, simply add the other person onto your policy as an additional insured. But before you do that, you’ll need to take inventory of your belongings and risks to make sure you have enough coverage.

Since another person’s belongings will be on the policy, you’ll assuredly need to enroll in more personal property coverage. If they’ve got a dog, you may also want to increase your liability coverage. And, lastly, you’ll need to double your loss of use coverage in the event a peril temporarily forces you from your home.

Again, we highly recommend getting separate renters insurance policies unless you’re living with your current or soon-to-be spouse. You can each get a policy using Clovered’s intuitive online quoting tool, which allows you to compare rates from the nation’s top insurers to ensure you’re getting the perfect policy for the right price.

Getting a quote only takes a few minutes and you just need a few details about your home. Plug in the details and we’ll do the hard work in the background, running your data through our quoting engine to find the perfect policy for you.