Does Each Tenant Need Renters Insurance?

Does Each Tenant Need Renters Insurance?

Renters insurance isn't mandated by federal or state law—you either choose to buy it or your landlord may require it as part of your lease. But some states and insurance companies have regulations against having two unrelated, unmarried tenants listed on the same renters insurance policy. So if you're looking to do this, you'll need to check your state's laws and find an insurance company that allows you to list your roommate as an additional insured.

Learn more:How Much Does Renters Insurance Cost?

Risks of Sharing a Renters Insurance Policy

Assuming you can share a renters insurance policy with your roommate, it's not always a great idea to do so because it comes with several risks. Some of those include:

• Shared claims record: If one roommate files a claim through the renters insurance policy, the claim will appear on each roommate's insurance record, even if one of them wasn't involved. This may affect the premium you pay on future insurance policies.
• Claims disputes: Insurance companies don't determine who owns what in a roommate situation. If you don't have clear documentation of property, you might get shortchanged in a claim.
• Moving issues: You'll have to adjust your renters insurance policy every time one of your roommates moves out.
• Payout problems: Insurance companies cut one check when they approve a claim, and all roommates have to sign it before cashing. You'll have to agree on how to split any insurance payouts between you and your roommates.

Learn more:What Does Renters Insurance Cover?

Benefits of Having Your Own Renters Insurance Policy

When tenants have separate renters insurance policies, there are clear coverage boundaries between roommates. Some other benefits to having your own renters insurance policy:

• Access the entire coverage limit: Renters insurance policies come with annual dollar limits for each coverage type. Having your own policy means you can file claims up to those limits when needed—instead of splitting coverage with your roommate when sharing a policy.
• Control over the policy:You get to choose the insurance company and customize the policy's coverage limits and deductible according to your needs. And after successfully filing a claim, you won't need to agree with roommates on how to split up the payout.
• Satisfies a requirement: Some landlords or rental companies might require you to have your own coverage, particularly if you're on a separate lease from your roommate, you are subleasing or you live in a multitenant building.
• Credit and claims history stays separate: Your insurance record will only include information about how you managed the renters policy and whether you filed claims. A roommate's actions won't influence your record.

Learn more:Does Renters Insurance Require a Credit Check?

How to Get Renters Insurance

Buying renters insurance generally involves getting quotes, choosing your coverages and deductible, and submitting an application.

Before you get started, consider details like how much your belongings are worth, your budget for a monthly payment and whether you prefer replacement cost versus actual cash value coverage. And if you're buying renters insurance to fulfill a condition of your lease, check whether your landlord has minimum requirements.

Once you know what you need, get quotes from several different insurance carriers. Your auto insurance company is a good place to start, especially if it offers discounts for bundling coverage. As you gather quotes, make sure you use the same coverage and deductible details when you compare quotes with each insurer.

Once you pick an insurance provider, you'll purchase the policy and set a start date. The company will send you a digital copy of your policy. Be sure to update your policy if you move or purchase new items under coverage.

Learn more:Ways to Reduce the Cost of Your Renters Insurance

The Bottom Line

Keep in mind that if you're not named on an insurance policy, you're not covered—even if you're living in the same apartment—so it's smart to get your own policy. Having your own coverage will help ensure you're protected in the event of an accident, disaster or other malady, and will help you avoid legal and financial troubles.