This article has been updated from a previous version.
When you move in with roommates, you’ll typically agree on how to split bills before you sign the lease. From rent and electricity to household items, you decide how to manage shared expenses together.
But what happens when your landlord requires you to get tenant insurance? Can you add it to the list of bills you’ll split?
Although it’s not mandatory (unless explicitly required by your landlord), tenant insurance (or renter’s insurance) has many benefits. For one, it protects you and your personal belongings from unforeseen events and even third-party liabilities. Your landlord’s insurance will not cover you if a fire, theft, or any other hazard occurs in your rental unit. Without this coverage, you’ll be on the hook for damages, which can be very costly, especially if you’re on a tight budget.
Can you split tenant insurance in a shared house?
Unlike with immediate family members who live together, a tenant insurance policy will not automatically cover you and your roommate(s). However, some insurance companies allow policyholders to list individuals on their tenant insurance policy even if they’re not related.
There might be limits on how many people can be listed on one policy. If you live with roommates, all of you will need to check with your insurance provider to see if it’s possible to be on the same policy and share the insurance premium.
Tenant insurance costs about $300 per year, depending on your coverage. That means monthly payments may cost as low as $20 to $30. Split amongst three roommates, you could each be paying around $10 per month. Sharing the cost of tenant insurance is relatively affordable, especially considering how costly it could be if disaster strikes without it.
Plus, there’s no extra charge to add a roommate to your policy. However, your premium could only increase if you choose to increase your rental insurance coverage to accommodate the value of their belongings or by adding an additional endorsement for jewelry or other valuable items.
Should you share tenant insurance with a roommate?
While splitting tenant insurance with your roommate may sound like a good deal, there are a few disadvantages that you should be aware of and think through thoroughly.
Here are a few things to consider:
Impact on your insurance history: Blending insurance histories is not always a smooth process. If you’re sharing a tenant insurance policy and your roommate files a claim that doesn’t involve you, that claim could also appear on your insurance record. And this may affect the cost of your premium in the future if you apply for home insurance.
Claims payout: You also have to think about how much you know and trust your roommates. Sharing tenant insurance with roommates means anyone can change or cancel the policy at any time. In the event of a loss, all claim payouts will be payable to all the roommates. Be sure to have a conversation beforehand with your roommate(s) to decide how you’ll divide it.
Updating the policy: You also need to consider how long you will be living together. If you get a new roommate every semester or every few months, you’ll have to remember to notify your insurance company to update your policy.
For these reasons, Leslie Lacroix, senior vice-president at Insurance Operations HUB Customer Central, recommends that each tenant get their own rental insurance. Not only is it less complicated, but it also ensures that each tenant has personal liability coverage.
Suppose a letter carrier falls and injures themselves on your porch, and they decide to sue you for damages. In this case, any financial losses that arise will be covered by the personal liability portion of your insurance policy.
A minimum of $1 million is usually recommended as personal liability coverage, but you can choose your own limits.
And that coverage “follows you anywhere in the world,” says Lacroix.
“Generally speaking, if somebody were to sue you for something like that, you’re likely looking at hundreds of thousands, maybe a million or more. And that’s where the policy is really protecting you from that financial devastation.”
There are other ways to get affordable tenant insurance coverage
If you’re looking to ways to save money on tenant insurance or for that matter, home insurance, Lacroix suggests speaking with your insurance broker.
“Rather than eliminating the policy altogether, increasing your deductible is one of the more obvious ones,” she says.
Lacroix also suggests switching from all-perils coverage, which protects your belongings against the widest range of hazards, to named-perils coverage. Named- or specified-perils coverage only protects your belongings from the most common types of hazards, like fire and water damage.
An all-perils policy is the more expensive option of the two.
“Sometimes there’s some additional coverage on the policy that you may not need or that is nice to have,” Lacroix says.
The fact is, rising unaffordability means that roommates aren’t just for young people anymore. Not only are roommate households the fastest growing type of living arrangement in Canada, but older seniors are also opening up their homes to roommates.
Whether you’re living with good friends or total strangers, sharing your tenant insurance policy or getting one independently, it helps to compare rates across various insurance providers to make sure you are getting the lowest rate.
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