You share a roof together — but should you share your car insurance?
Having a roommate is a pretty common occurrence for most people. It’s a great way to split the cost of living and, unless you have a particularly bad roommate, a good way to spend your time. Still, there are some issues that come with living with your roommate in terms of your auto insurance you might not consider. Let’s break it down.
As a general rule, anyone that lives with you needs to either be added to your car insurance policy, or be an excluded driver. This has to do with the increased likeliness of your roommate, given their location, will use your vehicle and might file a claim. If your roommate is not a rated driver (someone on your policy), your insurance company hasn’t had a chance to evaluate them as a risk or rate them for that risk.
Usually, when you add your roommate and their vehicle to your policy, you are eligible for a multi-car discount. Now, the amount of the discount per underwriting rules, any discount is worth considering.
As the only options are excluding/adding, if you add your roommate to your policy, you are both able to switch vehicles as you like and need. So if your car breaks down and you need to borrow your roommates for a week, you will be covered in the event of an accident. However, if you are excluded, you wouldn’t have coverage and thus are encouraged not to use their vehicle.
If your roommate has a bad driving record, i.e., lots of at-fault accidents or citations, your bill will be higher because they are being rated on your policy. Keeping your policy would ensure you are not financially penalized for their driving mistakes.
Most insurance companies and most states use your credit score as a determining factor for your premium. Just like having a poor driving record, having a low credit score can negatively impact your premium significantly.
If you drive a Toyota Corolla but your roommate drives a Lamborghini, you should expect a significant difference in your premiums. Your insurance company has to soften the risk of insuring such a high-value car by charging a high premium. If you’re worried about footing the bill for their fancy and expensive car, think about getting your own policy.
Unlike your car insurance, your renters insurance isn’t as strict as your auto. You are welcome to have a joint or separate renters insurance policy as you wish. Check out our ins-and-outs for renters insurance.
|Renter||Renter with Multi-Policy||Savings|
The big thing to take away from car insurance when you have a roommate is the requirement to either add your roommate or exclude them from your policy. Because of the high chance of sharing vehicles, your insurance company wants to know who they are doing business with. They, understandably so, want to evaluate all risks posed to them. If you’re worried about your roommates driving profile hurting your premium, exclude them from your policy. If, however, you and your roommate want the ability to share vehicles or be eligible for a discount, you should add them to your policy. At the end of the day, the best way to save on your auto insurance is to shop around for car insurance (with or without your roommate) every 6 months.