Can living with roommates affect your insurance coverage?
Can Significant others cause significant insurance risk?
Are you or someone you know living with non relative roommates? If so, have you, or they, talked to an insurance agent to see what affect it will have on your homeowners insurance or renters insurance?
The types of roommates that could cause gaps in coverage include (but not limited to):
The issue arises on the homeowners or renters insurance policy because they are not considered an “insured” under the definition of the policy.
Insured as defined in the policy includes:
- You (and your spouse if they are a resident of the same household)
- Resident relatives
- Other persons under the age of 21 in the care of an insured
So, if your roommate does not fit the definition of an insured under the policy, it creates some gaps in insurance coverage for them. These gaps include (but not limited to):
- Their personal property is limited to $500 of coverage under your policy
- They have NO personal liability coverage under your insurance policy
This is an issue because a roommate most likely has more than $500 worth of “stuff” in your shared residence. This includes their clothing, computers, electronics, furniture, dishes, etc. It also causes an issue for any items in which you both “chipped in” for. Say you have $1500 flat screen on the wall that you each paid 50% of the cost. If the TV is destroyed by a covered loss, then the insurance company is only obligated to pay for your portion of TV.
Not having the personal liability is a big deal as well. If your roommate is out playing golf and hits a wicked slice that strikes and injures another golfer, your liability insurance from the renters or home insurance policy will not cover your roommate.
Now think of this scenario. You are living with your fiance’, saving and planning for the perfect wedding. Then something happens and your fiance is sued for $300,000 only to find out that they are not covered on your homeowners insurance policy. How would that affect your wedding plans? I think it would be devastating and a 10 minute talks with your trusted insurance advisor could have given you the peace of mind that a situation like this would not cause such angst.
So, as your life changes, you need to stay in contact with your insurance agent so you do not find out about a gap in coverage after it is too late. See our Real Life Situations research center page.
If you or anyone you know is living with roommates or significant others, please let them know that it would be a great idea to talk to someone about their insurance coverage. We are always here to talk if you want to reach out to us. 410-647-1111 or firstname.lastname@example.org