Roommates And Auto Insurance: What's The Connection?

Having a roommate can be a great way to save money on rent and utility bills, but it's important to be aware of how it can impact your auto insurance. Even if your roommate doesn't drive your car, their mere presence as another licensed driver in your household can affect your insurance rates. This is because insurance companies assume there's a chance your roommate might borrow your car, especially in an emergency, and they want to determine the risk this poses. If your roommate has a poor driving record or a low credit score, your insurance company may view them as a high-risk driver, which could increase your premium. On the other hand, if they have a clean driving record, adding them to your policy could lower your rates.

Roommates are assumed to borrow your car

Insurance companies assume that if you share a house with a roommate, they will have access to your car and may drive it, even without your permission. This assumption is reflected in the requirement by some insurance companies to list all licensed drivers residing in the same household. This includes roommates, relatives, friends, or strangers renting a room in your house.

The assumption that roommates will borrow your car is further supported by the fact that many insurance companies allow roommates to share car insurance policies. This is possible if both cars are kept at the same address overnight, even if the roommates drive different vehicles or have different last names. Adding a roommate to your auto insurance policy can increase the cost of your individual policy, but it may be more cost-effective than having separate policies.

While you are not required to add your roommate to your car insurance policy if they don't drive your car, it is generally recommended to do so if there is any chance they might borrow it. This is because, in the event of an accident, your insurance company may deny coverage if an unlisted household member was driving. Excluding your roommate from your policy means they are specifically not covered to drive your car, even with permission.

In summary, the assumption that roommates will borrow each other's cars is based on their shared living space and access to each other's vehicles. This assumption impacts car insurance policies and rates, as insurance companies assess the risk associated with multiple drivers and vehicles under one policy.

Insurers want to know about all potential drivers

Insurers will often require you to list all licensed drivers in your household, including roommates, on your policy. This is because they assume there is a possibility that your roommate will use your car at some point. If you don't list your roommate on your policy, and they have an accident while driving your car, your insurance company may not cover the accident.

Even if your roommate is a good driver, it's important to notify your insurer that you live with another driver and provide their details. This will ensure that your insurance company has all the information they need to assess your risk accurately and provide the appropriate coverage.

If you don't want to add your roommate to your policy, you may be able to exclude them from your coverage. This means that they won't be covered to drive your car, even with your permission. However, rules for excluding drivers vary by state and insurance company, so it's important to check with your insurer.

Ultimately, insurers want to know about all potential drivers to accurately assess the risk of insuring you and your vehicle. By providing them with this information, you can ensure that you have the appropriate coverage in place and avoid any issues in the event of an accident.

Excluding a roommate from your policy

If you don't want to add your roommate to your car insurance policy, you can exclude them from your coverage. This is called a "named driver exclusion" or listing them as an "excluded driver". This means they are specifically not covered to drive your car, even with your permission. If your roommate is a high-risk driver, excluding them from your policy can help keep your premiums low.

However, if your roommate drives your car, even without your permission, and is not listed on your policy, your insurance company may not cover the accident. In this case, you would have to say that your roommate took your car without your knowledge, or that it was stolen. This could lead to a difficult situation at home. Also, if they are not listed as a driver and they get into an accident in your car, your insurance may cover the damage to your car, but the medical coverage might not extend to your roommate. Anyone injured in the accident could come after your assets after your insurance limits are reached.

The rules for excluding drivers in your household vary based on where you live and what insurance company you use. Check with your insurer whenever your household changes to ensure your auto insurance policy fully covers you and your vehicle.

Some states, such as Michigan, Kansas, New York, Virginia and Wisconsin, don’t allow a driver to be excluded from a policy.

Roommates with bad driving records

If your roommate has a history of driving under the influence (DUI) or other serious violations, insurance companies may outright reject you as a customer or significantly increase your rates. In some cases, your rates could double due to your roommate's poor driving record.

To avoid these consequences, you have the option to exclude your roommate from your policy. By doing so, they will not be covered by your insurance if they drive your car. However, some states, such as Michigan, Kansas, New York, Virginia, and Wisconsin, do not allow drivers to be excluded from a policy.

It is important to disclose all licensed drivers in your household to your insurance company. Failure to do so may result in increased rates or even cancellation of your policy if the insurance company discovers an undisclosed driver residing at your address.

Additionally, if your roommate has a bad driving record and is listed on your policy, you may lose safe driver discounts or other incentives you previously enjoyed. Their driving history will impact your premium, and you may end up paying more due to their higher-risk profile.

To mitigate these issues, it is advisable to maintain separate insurance policies. By keeping your policy separate from your roommate's, you can avoid being penalised for their driving mistakes and maintain lower insurance rates.

Roommates with poor credit

In most US states, insurance companies use credit scores as a factor to set premiums. A low credit score can negatively impact car insurance premiums. All other metrics being equal, a driver with "excellent" credit (800-850) pays $744 less than a driver in the "very poor" credit tier (300-579).

If your roommate has a poor credit score, your insurance premium will be higher if you share a policy. This is because the insurance company is accounting for the financial risk of insuring your roommate by charging a higher premium.

If your roommate won't be driving your car, you don't need to add them to your car insurance policy. However, if they do drive your car, even occasionally, you will need to add them to your policy.

If you don't want to add your roommate to your policy, you can list them as an excluded driver. This means they won't be covered if they drive your car and get into an accident.

Frequently asked questions