Roommates can open holes in your home insurance

By Susan Ladika on September 13th, 2011


RoommatesIf you own your home, you may be tempted to have a roommate or two move in to help you cover your costs. But before you take that step, make sure to contact your homeowners insurance provider to ensure you have the correct coverage.

Often, the type of coverage you require will depend on how many people move in and whether they are related to you. Insurance companies generally won't blink if your elderly mother or your son who just graduated from college decide to live with you.

But things can be different if the roomies aren't relatives. Some insurance companies allow you to keep your current coverage if just one person, like a friend or neighbor, moves in.

But if half your college football team moves into your home, it could be a different story. In that case, you might need to change your homeowners policy and instead get a dwelling fire policy, which covers particular types of incidents, such as damage caused by a fire or a lightning strike.

That policy won't provide you with coverage if you're the victim of a theft. Instead, theft and other kinds of losses would have to be covered under separate policies.

Having a roommate move in also may expose you to increased liability risks. For example, if your roommate's dog bites someone, you could be liable.

Or, if your roomie hosts a pool party and someone gets hurt, you could be liable, even if you weren't at home when the accident occurred.

Because insurance laws differ from state to state and insurance companies all have their own policies and caveats, it's crucial to talk to your insurance agent in advance to get advice.

And as the homeowner, you're not the only one who needs to worry about having the proper insurance coverage.

Your roommate also should purchase a renters insurance policy. Your home insurance will cover your home and possessions if they are damaged or destroyed.

But your renter will likely have zero protection. If a fire burns up your home, and your roommate's clothing, electronics and other personal property go up in smoke, he or she will have no insurer to step in and cover losses.

It's a different story if your roommate borrows your car from time to time. He or she would be covered under your auto insurance policy, although the amount of coverage can vary from company to company.



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