Roommates and Renters Insurance
Can non married roommates be on the same renter’s insurance policy?
This is a great question and the answer of whether a non-married roommates can be listed on the same renter’s insurance policy depends on the insurance company’s eligibility guidelines.
Several of the insurance companies that we represent will allow non married roommates to be on one renter’s insurance policy. They will either list both individuals as co named insureds or list one as the named insured and the other as additional named insured.
But my question to you is this:
Why isn’t it a good idea to for a non-married couple living together to have one renters insurance policy?
After all, as long as your personal property is going to be fully covered, why would you need to have your own separate insurance policy?
It is true that all of your belongings will be covered under the policy up to the personal property limits listed on the policy. So that is not the area of my concern.
My area of concern is the liability portion of the policy. Essentially, you would be sharing the liability limit with your roommate on your renters insurance policy.
You may be thinking, “That’s ok, the limit is $500,000, so $250,000 liability limit for me should be enough.”
But let’s take a step back. Just because I stated that you would be sharing the limits does not mean that the limits are split equally between you and your roommate.
Let’s say that someone gets hurt while you and your roommate are hosting a social event at your apartment. Then the lawsuit gets filed and they injured party is suing you and your roommate for $500,000.
You may be thinking that you are still OK, since the limit on the policy is $500,000 and should cover the lawsuit if the injured party wins their case.
Then your attorney advises you of the fine print. The injured party is suing you and your roommate each for $500,000. Well that is where my concerns come into play.
A few months later your roommate settles their portion of the lawsuit for $400,000.
Your lawsuit remains open, but now there is only $100,000 of the liability limit remains available for you. So if you end up being found liable for $400,000, then you have a major weakness in your insurance coverage to the tune of $300,000.
The renters policy will only respond and pay the balance of the limits, which is $100,000. This leaves you responsible for the additional $300,000.
So how would you resolve this policy weakness?
At Huff Insurance, we always recommend that non-married roommates each obtain their own renter’s insurance policies.
In doing this, you will not be forced to share the limits of your policy with your roommate. So if you liability limits are $500,000, then you will be covered for up to the full $500,000 if a covered lawsuit is filed against you.
How come married couples don’t have to buy two policies?
Married couples cannot be named separately in a lawsuit. Therefore the injured party will only be able to sue them both together and the limits will not be split between the two for the given incident. So one spouse could not use up the limits in the policy, leaving the other unprotected.
Now that being said, if they are sued for $1,000,000 and they only have $500,000 in liability coverage, there would still have a major weakness in their coverage that they would both be liable to pay.
So in the end, renters insurance is not that expensive.
And dealing with your roommates and renters insurance should not be that complicated. You just have to make sure you are dealing with the right independent insurance agent.
So trying to save a few hundred bucks could expose you to hundreds of thousands of dollars in possible liability claims.
In a future blog, we will talk about the insurance implications of non-married individuals buying a home together. If you think the renters situation seem complicated, then you will love what we will have to say about the buyers situation.
Please note that we are not lawyers and we are only writing about our experiences and knowledge of the insurance industry. Laws vary by state and insurance coverage varies by state and by insurance company. So if you need legal clarification, please contact an attorney.
If you need clarification on your specific renters insurance policy, please contact your insurance agent or your insurance company directly.
Huff Insurance is a Maryland Trusted Choice Independent Insurance Agency. We are here to help you with all of your insurance needs. If you have any questions, please post a comment on this blog or give us a call at 410-647-1111