Renters’ insurance policies general only cover the individual (and their immediate family members) who is paying the premium; they do not cover roommates. Items that are purchased in conjunction with a roommate are also not fully covered, and it is usually difficult to demonstrate a partial ownership situation. To avoid confusion, litigation or lack of payment by an insurance provider, we recommend that all members of a dwelling purchase individual rental insurance policies.
Granted, you can’t force your roommates to get renters insurance. If you do jointly own a significant piece of personal property, you should take extra steps to demonstrate your partial ownership. Keep the receipt and make note of the partial ownership situation. Also keeping records that prove the partial payment, such as a bank statement, cancelled check or credit card receipt. Notation of the partial ownership arrangement, even if it is simply a written document that is stored in a safe place (and filed with your insurance agent to be safe) will serve you well.
Additionally, if you live in a 5 bedroom house, should you purchase loss of use coverage, note that this will not necessarily result in coverage for finding a similar dwelling. What the insurance company will provide is compensation equal to what you were paying to live in the original house. If all of the roommates have the same loss of use coverage, collectively you can pool your insurance resources to find a comparable dwelling. This is especially useful for non-married individuals who live with significant others, or extended families who live together.
However, there may be restrictions or idiosyncrasies that you should understand before assuming this is the case. Depending on the policy you purchase, you may only be entitled to a portion of your current rental cost and/or for only a short period of time. Additional coverage can be purchased, but of course the premium increases to offset. Review your policy in detail or discuss with your agent to make sure you are informed about the specifics of your policy.
Rates vary and fluctuate year-to-year. It is important for each roommate to check insurance rates on an annual basis to make sure that they are adequately covered and receiving the best coverage for the lowest premium. Individual characteristics determine policy premiums; therefore different individuals may find different rates with different insurers. However, in the event of a loss, it may be easier for all roommates to deal with one insurance provider than to have to coordinate among several.
Lastly, be sure to talk about any specific concerns with your insurance agent (or prospective agent), as they can provide additional recommendations on how to keep yourself adequately protected. They have a vested interest in making sure that you and the insurance provider are both very clear about what is covered and what is not covered. It not only helps avoid time consuming disagreements when it comes time to file a claim, but it helps them ensure you receive the best customer experience possible. They are, after all, working for you.