A renters insurance policy covers your belongings, liability and possibly extra costs if you have to relocate while your rental home is repaired. If you're renting a place with a significant other, getting a policy together may just seem like common sense.
The truth of the matter is that there are more drawbacks than benefits in sharing renters insurance with anyone, whether they be girlfriend, boyfriend or just a roommate. Sharing renters insurance with another means having to share the policy's limits as well. Also, getting claim checks cashed or policy changes can be very difficult after a breakup.
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Can significant others share renters insurance?
Most states allow two unrelated people to share a renters insurance policy if they live in the same rental home. Many renters insurance companies allow policy sharing as well.
Should you share a renters insurance policy with a significant other? That's a very different question. Sharing a policy means sharing its limits. For example, say you're sharing a renters insurance policy with a $50,000 personal property limit. If your rental home is destroyed by a fire, that $50,000 dollars needs to cover the replacement of both people on the policy. If that limit is hit, you and your partner have to pay for the remainder of replacements out of your own pockets. A shared policy may make sense if both of you own many things jointly, otherwise it should be avoided.
This limit also can restrict the effectiveness of your additional living expenses (ALE) coverage. The ALE limit of a renters insurance policy is usually 10% to 30% of the total policy coverage limit. This is meant to cover the extra costs such as food and rent that arise if you need to relocate temporarily. If you are sharing the policy with another, that limit is probably going to be reached twice as quickly. Again, once the limit is hit, you're paying costs out of pocket.
Having a joint policy can also affect both of your insurance claim histories. For example, if someone steals your partner's laptop and they file a claim, the claim goes on both policyholders' insurance histories, and usually stays there for up to seven years. During that time, you can expect to see higher premium costs for your renters insurance even if you personally never filed a claim.
If an unfortunate breakup occurs, insurance-related issues can become more complicated. If you need to remove someone from your policy, most renters insurance companies require written permission from the person you're removing. This can be difficult. The same if you both need to sign a claim check. Many of the reasons to avoid getting a shared policy applies to roommates as well as significant others.
What renters insurance covers
A renters insurance policy provides coverage in three areas: personal property, liability and additional living expenses.
Personal property coverage
Personal property coverage is designed to repair or replace your belongings if they are damaged or destroyed by a covered peril. This includes the following:
If your rental home was destroyed by a peril covered by your renters insurance, you would want to have enough coverage to fully replace everything you own. The best way to make sure you have enough coverage is to create an inventory list of your possessions. Include the replacement cost, model and make numbers when available. This list will not only provide an accurate amount of coverage you need to buy, but can speed up your claim and payout processes.
The liability portion of your renters insurance policy covers you against injuries to others and property damage you're responsible for, as well as damage caused by family members or pets. Liability covers your legal costs and medical expenses for injury or damages you're responsible for, but not your own. If your dog destroys someone else's rug, renters insurance covers you. If your dog destroys your own rug, your renters policy won't cover you.
Liability limits in a renters insurance policy usually start at $100,000. While this seems like a significant amount, a long court case or extended hospital stay you're responsible for can tear through that limit quickly. It is recommended that you increase your liability limit to $300,000 if financially possible. The cost difference is usually affordable.
Additional living expenses (ALE)
If you need to relocate while damages to your rental home are repaired, ALE (also known as "loss of use") provides for the payment of extra costs due to the relocation. This includes:
- Extra commute costs
- Furniture rental
Flood and earthquake damage are common exclusions in renters insurance policies, however they're often available as supplemental coverage.
How to get a shared renters insurance policy
If you do choose to go ahead with a shared renters insurance policy, the first step is to find a provider that allows it. A lot of insurers permit joint policies. Renters insurance policies usually have the same offerings, leaving cost as the main difference between them. Take this opportunity to compare renters insurance quotes from multiple companies. We found the average cost of standard renters insurance to be $219 a year, or about $18 a month. Take the time to find the best combo of cost and coverage.
When you do find your best choice, make sure that both you and your partner are listed on the rental agreement. Your insurer will require this in order for you two to both be on the policy.
If you and your significant other own enough personal property together to cover in two separate renters insurance policies, getting a joint policy can be a good idea. Otherwise, the decreased individual coverage and difficulties that can arise after a breakup really don't make it a worthwhile choice. The low cost of a renters insurance policy and the problems that are avoided make getting separate policies the reasonable choice.
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