Does My Roommate Need Renters Insurance Too?

A 2015 poll conducted by ORC International (Opinion Research Corporation) for the Insurance Information Institute (I.I.I.) estimates that, while approximately 95% of the homeowners in the United States maintain a homeowner's insurance policy, only about 37% of renters buy renters insurance coverage. This may be partly because when you buy a house by borrowing money from a mortgage provider, they'll require that you have homeowners insurance coverage in order to protect their financial interests in the home. Nobody requires renters to buy and maintain renters insurance.

What is Renters Insurance?

As a renter, the dwelling you occupy is most likely covered by your landlord's insurance, which protects the home or apartment from typical perils facing homeowners, such as fire, hurricanes, hail, lightning, etc., but what their insurance doesn't cover is your personal possessions. If the home is damaged or destroyed by fire, for example, the landlord's coverage will help pay to repair or replace the dwelling. Your personal possessions within the dwelling, however, will be a total loss unless you have renters insurance to help repair or replace them. Most renters coverage also includes protection against liability should someone suffer a loss in the home due to your negligence. You'll also be protected against theft, unless the theft is committed by your roommate.  

Coverage for Your Roommate

If you have a roommate, he or she can be added to your renters insurance policy or they can opt for their own separate coverage. If you add them to your policy, you may save money by splitting the premium costs, but if a claim is made and paid, the check will be made out to both of you. Even if only your possessions are lost, damaged or destroyed, the claims payment will be made jointly, and it'll be up to you to determine how to split it.
Likewise, if your roommate makes a claim, it will also show up on your personal insurance history, which could change your risk profile for buying future coverage. Additionally, if your roommate is faced with liability issues, with a joint policy you'll also be involved in the legal process.

With renters insurance, only those named on the policy will have protection. If you change roommates often, it might make sense to maintain your own policy, especially since rates are so reasonable. Saving a few premium dollars is really the only advantage to having a joint policy.