When you live in an expensive city, move to a new place or just enjoy the company of a roommate, living with another person can be the smart way to go. It's easy to split the rent 50/50, figure out who should buy the dish soap and set a few general rules for your happy home. But, when it comes to insurance, you may get confused. You've heard you should have renters insurance, but if you get a policy, will it cover your roommate? The quick answer is: usually no, but, sometimes it can.
Renters insurance is usually intended to cover a single person, a couple or a family in one apartment, Nerd Wallet explained. If something happens, such as a fire or break in, the policy covers the property of the person listed. That means if a thief steals items that belonged to your roommate, your renters insurance probably doesn't cover it.
But, some insurance companies will let you add a second person to your insurance policy. To do this properly, you need to add an additional name insured to your policy, Biscoe Insurance Group advised. If you do this, make sure you increase the value of covered property. Don't add the person and forget to include their property - then you'll be splitting too small of a payout if something happens.
Do you want your policy to cover your roommate?
Whether or not your policy covers your roommate isn't always the right question to ask. Sometimes, you need to consider whether that's the best financial decision for you. The premium for your insurance policy is based on the value of your property and adding your roommate's belongings can drive up the price. You may think you'll just split the premium, but, does 50/50 work in this scenario or does one of you have more valuable items than the other?
Another question to consider is if something happens and the insurance policy pays out. How do you split the money? Also, the check will be made out to both of you, so you'll both need to sign it to cash it.
Consider all the possible scenarios that can happen if you're sharing an insurance policy with a roommate. It may be smart to keep your finances and insurance separate. If you decide to keep it separate, make sure you both get policies that will cover each of your valuables.
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