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Roommates and Insurance

Sometimes the best way to afford an apartment is to bring in a roommate. Roommates can help to defray the cost of the rent share overall expenses and of course provide some company. Especially if you’re just starting out a roommate could be a great idea if you want to be able to save money while maximizing your ability to rent a decent place to live. Alternatively in order to try and earn some additional income you may rent out a portion of your own home to someone. Whether this is in a basement suite or a more traditional roommate agreement this again helps with reducing costs.

The presence of a roommate can affect your insurance in both scenarios and is something important to keep in mind. Talk to your insurance broker about the ramifications of renting out a bedroom or basement suite or assuming a dual renter situation with someone else. They will be able to help clarify the things you’ll need when it comes to roommates and insurance.

You and a Friend Decide to Room Together and Share the Cost of Rent

If you’re renting a place with a friend you need to get renter’s insurance (also known as tenant’s insurance) in order to protect your own belongings as well as provide liability coverage. But do you each need your own policy? The answer is yes – unless you’re married or common law. This way you each have coverage for your own possessions and each have your own liability coverage. This means you will not become enmeshed in one another’s legal or medical problems should any claims arise and you can be confident that your belongings will be protected.

You can take out a single policy and both be listed as policyholders but this especially if you are not romantically linked and/or do not have joint possessions can become a bit messy and confusing. For roommates each having their own renter’s insurance makes the most sense.

You Decide to Rent Out Space or a Room in Your Home and Take on A Roommate

This is a common scenario and a terrific option to give homeowners a bit of breathing room on their bills and mortgage. But you should take into consideration what this arrangement will mean for your homeowner’s insurance policy.

First of all you need to inform your broker or insurance company that you’re renting out a room or basement. You’re changing the risk by bringing another person into your home and you’re involving money – that means liability is going to be an important factor to your insurance coverage. Talk to your broker about how to ensure you’re protected as a landlord and read up on both landlord and tenant responsibilities.

A homeowner’s policy will cover the structure itself as well as all of your personal belongings in the event of damage theft or other disaster. For instance if there is a fire in the home it would be your homeowner’s policy that would cover the structural damage and be paying for repairs. This will not change if you have a tenant. However while your homeowner’s policy will cover your possessions up to a certain dollar value it will not cover the loss or theft of your roommate’s belongings. The best course of action is to require all roommates or tenants to have their own renter’s insurance in order to protect their possessions. Additionally they will be covered for any liability issues that may arise such as one of their guests tripping and breaking their leg.

Talk to your insurance broker about renter’s insurance and the effect of roommates and tenants on your homeowner’s policy.