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What does additional insured mean in renters insurance?
In renters insurance, an additional insured is a person other than yourself who’s listed on and covered by your policy.
Additional insured vs. policyholder
An additional insured is not a policyholder. The policyholder, or named insured, is responsible for paying for the policy and receives coverage by default. An additional insured (also known as an additional insured party or secondary insured) is someone who’s added to a renters insurance policy by the policyholder.
People often add their roommates or significant others to their policies as additional insured parties so that they can share a single policy.
You don’t need to add immediate family members as additional insured parties
Fortunately, you don’t need add your family members to your policy as additional insured parties (or have more than one renters insurance policy to cover them). Spouses and children including adopted children of any age and all dependents under your care are automatically covered by your original policy.
Note that adult foster children don’t typically qualify as relatives. Check your policy or ask your agent if you have any questions about who counts as immediate family.
Additional insured vs. additional interest
“Additional insured” and “additional interest” mean different things in renters insurance. An additional insured receives coverage under your policy, but an additional interest doesn’t.
A renters insurance additional interest, also known as an interested party or party of interest, just gets information and updates about your policy’s status — such as if you reduce or cancel your coverage, add a secondary insured, and so on.
Who should you add as an additional insured to your renters insurance?
Adding people to your policy will drive up your renters insurance premium, so don’t play it fast and loose with the “additional insured” feature. Try to limit it to the following people:
Your romantic partner
Renters insurance won’t automatically cover your partner if you aren’t married or otherwise legally attached. If you both live together, consider adding your partner as an additional insured — especially if you co-own furniture and other valuables.
If you live with non-immediate family members, like a niece or cousin, your renters insurance policy won’t cover them. You might want to include them as an additional insured as well.
Who shouldn’t you list as an additional insured on your renters insurance policy?
The purpose of renters insurance is to protect your personal property and finances. This means that the following people don’t need to be listed as an additional insured:
Listing a property manager or landlord as an additional insured is never a good idea unless you’re renting for commercial purposes. You have significant financial obligations to your residential landlord, so sharing coverage puts you in a very vulnerable position.
Furthermore, sharing your renters insurance with your landlord is a bad idea for several other reasons:
Shared coverage is reduced coverage
All parties insured under your policy share the same coverage limit. This means that if your landlord’s things are damaged and your landlord is an additional insured, they can file a renters insurance claim under your policy. If the insurer makes any payments to the landlord as a result of that claim, it counts toward your policy limit.
For example, if they receive $2,000 for damaged appliances, that’s $2,000 you can’t claim for the same incident. This can quickly eat into your available coverage, especially if there’s major damage from a fire or natural disaster.
There are conflicts of interest
Insurance companies have a legal obligation to defend policyholders. If your landlord has coverage under your policy, you might not get the backup you need in a dispute.
For example, if your landlord files a lawsuit against you (alleging that you intentionally damaged the unit, for instance), your insurer will normally take care of your legal defense. If both you and your landlord are listed on the same policy, their obligations are a lot less clear.
It may be prohibited
Some insurance companies won’t allow you to list your landlord as an additional insured if you rent a residential property.
Because of the previously listed reasons, insurance companies recognize that it’s not in your best interest to cover your landlord under your renters insurance policy. What’s more, your landlord probably has their own homeowners insurance or landlord insurance policy, and insurers generally prefer to avoid doubling up on coverage.
Although you might be tempted to share renters insurance with your roommate, they probably don’t belong on your personal policy.
Here are a few reasons that adding your roommate as an additional insured is a bad idea:
It can lead to fights over money
A shared policy means shared coverage, but most roommates have their own personal property. If an incident occurs, you have to split the payout. That can easily lead to problems when the payout doesn’t fully cover the damage, or if one person’s belongings are more valuable than the other’s.
Also, your renters insurance policy may limit your per-claim payout for items within a particular category. For instance, if you have a $1,000 limit on collectibles, that might be enough to cover your $750 collection of baseball cards from the 90s, but it gets trickier when you add in your roommate’s $1,000 stack of rare comics. Claims are always simpler when everyone in question has their own policy.
Multiple claims make insurance expensive
When someone makes a claim on a renters insurance policy, it goes on the claims history of everyone who has coverage under that policy.
Insurance companies charge higher premiums for people who have filed multiple claims. Even one claim can cause your rates to go up. More than one in a few years’ time can cause your insurer to cancel your policy.
With two unrelated people on one policy, it’s easy to file too many claims. If you file two claims because your roommate’s laptop was damaged by a broken water pipe and your bike was stolen, you might already be over the limit.
The value of separate policies
You can avoid all of these issues simply by having a renters insurance policy that’s separate from your roommate’s. The price of renters insurance is low enough that usually isn’t much of an imposition.
Separate policies mean more coverage because each of you has your own limit. If there’s a payout, each person gets their due without debate.
Plus, if something happens to your roommate’s belongings and not yours, you don’t have to file a claim. Finances stay separate and peace in the house reigns.
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