Today’s question comes from Bailey, who has renters insurance in Plainsboro, NJ. She asks,
My sister and I share an apartment. Should we both be on the renters insurance policy? If we get another roommate, does she need to be listed on renters insurance?
Great question, Bailey! It’s actually two questions with different answers, so let’s break it down into parts. Currently, you and your sister share the apartment. Who should be listed on renters insurance?
Who Should Be Listed On Renters Insurance?
Bailey, who has Plainsboro, NJ renters insurance, writes in with today’s question. She and her sister share an apartment, and she wants to know who should be listed on renters insurance and if they need to make any changes if they get another roommate…
Generally speaking, your renters insurance policy defines the named insured of the policy as “named insured, resident spouse, and resident relatives.” So your sister would be covered under your policy while you live together. Make sure to check your policy for that definition, though. Some communities want to see the names of all adult occupants on the policy, though it’s generally unnecessary. If your property management wants to see both names, adding your sister is easy enough and doesn’t generally cost anything.
On the other hand, if you two get a roommate who’s not related to you, you have two good options for who should be listed on renters insurance. The new roommate can get her own renters insurance policy, which would provide her with the full protection of the policy limits even if there was a loss that involved more than one of you.
You can also add the new roommate onto your policy with an endorsement, generally for around $60 a year – half or less of the cost of her getting her own policy. If you endorse her onto your policy, remember that the policy limits are what the policy limits are.
Limits are aggregate numbers, so if you have $15,000 of New Jersey renters insurance personal property coverage and a total loss like a fire, you’ll be splitting that limit between everyone covered by the policy. Keep that in mind when selecting policy limits. Also keep in mind that claims are paid proportionately and only up to the policy limits. If you bought 50% of the stuff in the apartment, you get 50% of the claim if it’s in excess of the limits. Two roommates would each then get 25%, assuming everyone’s contributions to the personal property was that clearly defined.
The reason it costs money to add a roommate to a renters insurance policy is simply that insuring more people incurs more risk on the part of the carrier. It’s also worth remembering that it’s never a good idea to make an unrelated roommate a named insured. Why? Glad you asked. If there’s a loss, the check is issued to the named insured(s) on the policy, and all must sign it in order to cash it. You can see where this could be problematic in certain situations.