Can Roommates Share Car Insurance?

Living with a roommate can make a lot of sense: You have someone to split everyday expenses and share household tasks with. You might even wonder, “Can roommates share car insurance?”

Sharing car insurance with your roommate is possible, and it might provide greater flexibility and help you save money on your premiums. However, several factors can make sharing car insurance with your roommate a less-than-ideal situation: If they drive an expensive car, have a bad driving record, or you’re living with them for only a short time.

While navigating sharing car insurance with a roommate can be tricky, we’ll look at how to do it effectively and make the right decision.

Key takeaways

• Your insurance company and where you live may require you to list any driver who currently lives at your address and could use your car.
• Sharing a policy with your roommate might help you save money compared to each of you having individual policies.
• Sharing car insurance with your roommate may qualify you for additional discounts.
• Individual policies might make more sense if you or your roommate has poor credit or a bad driving record.

Can roommates share car insurance?

If you and your roommate both have cars and live at the same address, many insurance companies will allow you to share one policy. This means having your chosen coverage options and limits on each vehicle but just one premium to pay.

Additionally, if you share an insurance policy and are in an accident while driving your roommate’s car, the insurance company will likely pay your claim up to your policy limits. This can be extremely helpful if you and your roommate often swap cars or commute together.

Sharing a policy vs. adding a driver

If you don’t want to share an insurance policy with your roommate but still want to allow them to borrow your car, you can add them as a rated or named driver on your policy. This means that you’re still the primary driver responsible for paying the total premium. However, if your roommate is in an accident while driving your car, your insurer would likely pay the claim.

It's important to note that your insurer will consider the added driver’s driving record and other factors that impact premiums, so this could raise your rates. Because of this, be careful about allowing people to drive your car and adding drivers to your policy.

Depending on your insurer and state, you might have the option to not add your roommate to the policy but still allow them to drive your car under your policy’s “permissive use” clause. Your insurer would still likely pay out if there’s a claim, but if your roommate also has car insurance, it may be used as secondary coverage to help with some of the costs after an accident.

Why does it matter who drives my car?

Although car insurance typically follows the vehicle and not the driver, the insurance company is interested in who could drive the car and the likelihood that that driver may be in an accident.

Depending on where you live and the language in your insurance policy, you may be required to list on your insurance policy anyone over the age of 14 who permanently lives at your address. This includes roommates, friends, siblings, significant others, or extended family.

The insurance company will review each person’s driving record and other factors to calculate the chance of a claim, also called the loss potential. Your premium costs are based partly on the loss potential of every rated driver on the policy.

Some of these drivers might live with you only part time. For example, if you share custody of a teenage driver or have a relative listed on your car registration but who doesn’t live with you, your insurer might still require listing them.

Disclosing all the potential drivers to your insurance company is vital, even if they only occasionally drive the vehicle. If an unlisted driver is in an accident, your insurance company might refuse to pay for the damages and, in some cases, cancel your policy.

Reasons why you might want to share

Sharing car insurance with a friend or family member can make a lot of sense for many reasons, including:

Potential premium savings: While you don’t have to share an insurance policy, doing so could help you and your roommate save money on your premiums. If you both have good driving records and credit scores, your total premium might go up, but the split cost may be less than two individual policies.

Insurers will generally offer a breakdown of costs by vehicle, showing you how much each car costs to insure based on its value, age, and other factors. While figuring out the price for shared liability might be more difficult, some insurers include the liability cost per vehicle, which helps you fairly divide the bill.

Potential discounts: Generally, having two or more vehicles insured through the same car insurance company means you can qualify for a multi-car discount. While the discount rate varies from company to company, it may be an excellent way to help you lower your rates.

Flexibility: Being on the same insurance policy means that you and your roommate have greater flexibility if one car is in the shop or you need to switch vehicles. In the eyes of the insurance company, you’re both covered, so you don't have to worry about who’s driving which vehicle.

Why you might prefer not to share

Although it can be beneficial, sometimes sharing an insurance policy with your roommate might not make sense. Since most auto insurers sell policies in 6- or 12-month increments, your decision could mean you’re in a difficult situation for a while.

Consider the following carefully before deciding to share a policy:

Potentially higher premiums: Insurance companies calculate premiums based in part on the driving record and credit score of every driver listed on the policy. If you or your roommate has a DUI, multiple speeding tickets, or other moving violations on your record, the split cost might be higher than having two individual policies.

Potentially lost discounts: Although combining more than one vehicle under the same insurer might positively impact your insurance rates, you may lose other discounts that might be worth more. If you participated in an insurance company’s safe driver program or received an extra discount for being accident free for a specific time, combining coverage with someone who may not qualify for those discounts could mean you lose them on the overall policy.

Short-term situations: You usually can’t share an insurance policy if you don’t share the same address. If someone is going to live with you for a couple of months, sharing an insurance policy might not be possible or worth it. However, if the person will be driving your car, adding them as a driver on your policy is a good idea.

How to decide whether to add your roommates

Putting roommates on your car insurance policy might seem like an obvious choice, especially if they’re driving your vehicle. However, you should consider multiple factors before you add a driver to your policy or decide to share it.

How often does someone else drive your car?

I don’t currently have roommates (unless you count the four-legged variety). But if I were considering sharing an insurance policy with someone, I would start by asking how often the person would be driving my car and vice versa.

If my roommate and I both had vehicles and commuted to the same general area or frequently drove places together, it might make sense to share an insurance policy. That way, we'd know we were covered no matter whose car we drove (or who was driving).

Your driving records:

Sharing an insurance policy with a driver who has DUIs, multiple accidents, or multiple claims on their driving record could mean you’ll pay more for insurance. Discuss your driving records honestly before you share an insurance policy with your roommate.

For example, if my hypothetical roommate had a solid driving record, I probably wouldn’t be worried about sharing an insurance policy with them. However, if I saw my roommate engage in reckless behavior while driving, I would be reluctant to share insurance with them.

Since any insurance claim you make will likely raise your rates, sharing a policy with someone more likely to get into an accident could mean that any savings will disappear with higher premium costs.

How reliable is the other person?

Sharing a policy might mean cheaper insurance for both of you. However, if your roommate isn’t great about paying their bills on time, the shared policy could become a problem.

Not paying your insurance premium or making multiple late payments could result in your insurance company canceling the policy. You might also get negative marks on your credit report if the insurer sends the unpaid balance to collections.

Again, if my hypothetical roommate was late paying rent, owed me money, or was consistently late paying other bills, I might think twice, especially if I couldn’t cover the entire premium.

Do you qualify for extra discounts?

Not only can you get a multi-car discount for having more than one vehicle insured, but you may also be able to bundle your car insurance with a home or renters policy for more savings. Just be aware that you might also lose some discounts by sharing your insurance policy.

Speak with your insurance agent about sharing coverage or adding your roommate as a driver. They can help you follow your insurance company’s rules and determine what discounts you would lose or any new discounts you are eligible for.

How to get a shared car insurance policy

Finding the right insurance policy can take some leg work. Whether you’re considering adding someone to an existing policy or getting an entirely new shared policy, it's essential to do your homework and understand your options.

Existing policies

If you want to add a new driver to your existing insurance policy, you can do so by going online or calling the insurance company. The process is generally straightforward, and you can usually change your policy anytime.

You’ll need to provide some information about the driver you’re adding, including:

• Their full name
• Date of birth
• Marital status
• Policyholder relationship
• Driver’s license number, state, and licensing date
• Vehicle make, model, and vehicle identification number
• A brief driving history, including any accidents or moving violations

Your insurance company will review the added driver’s record and inform you about any premium changes.

I recently renewed my insurance policy and reviewed my coverage options with my agent. She asked me if any new drivers lived in my household and if we needed to add any coverage to account for that.

Although I added glass coverage to my policy after a nasty experience, there weren’t any other changes to my policy or household. However, it did qualify me for an extra discount to help offset the cost. As you work with your insurance agent, ask if any changes qualify you to save.

New policies

If you’re looking for a new auto policy, it is essential to compare several options before deciding on an insurer.

To find the right car insurance company for you, consider the following:

Compare quotes: Before signing up with any insurance company, getting at least three quotes is smart. Be sure to also check each quote for the type of coverage and limits to ensure each policy is similar.

Read customer service reviews: Read customer service reviews from the Better Business Bureau and other websites to help you see what kinds of problems other customers experienced and if the insurance company responded. You can also ask friends and family members for recommendations, especially if you’ve recently moved to a new area.

Consider policy options: Not all insurance companies offer the same policies or discounts. While many of the best car insurance companies offer options like roadside assistance, glass coverage, and accident forgiveness, others may not. If you need a specific type of coverage, ensure the companies you’re reviewing offer it and have good customer service ratings.

For example, many nationally recognized insurance companies – such as State Farm, Allstate, Nationwide, Progressive, and USAA insurance (available only to military members and their families) – offer extensive lists of policy options and discounts.

Look for discounts: Insurance companies generally offer multiple discounts. While you can qualify for multi-car or bundling discounts, you can also save money for other things. Depending on your insurer, going paperless, paying your premium in full rather than monthly, and even having standard safety features on your car can earn extra discounts.

Alternatives to sharing car insurance coverage with roommates

Of course, just because you have a roommate doesn’t mean you need to share your car or your insurance coverage. There are multiple options available, such as:

• Keeping separate policies: Roommates can keep their insurance policies separate and pay the individual premiums. Since you live together, your insurance company might still list your roommate on your policy, though this usually won’t impact premiums unless that driver has an accident with your car. If you don’t drive each other’s vehicles or want to risk your roommate’s driving history factoring into your premiums, you might ask to have your roommate listed under “other insurance” and provide proof of their coverage.

• Excluding a driver: If your roommate will never drive your car, you can ask the insurance company to list them as an excluded driver on your policy — if your state allows this option. However, if your roommate does drive your car and gets into an accident as an excluded driver, your insurance company might not cover the damage.

FAQs

Bottom line

Sharing insurance with your roommate might be a great idea to help you both save money. But before you share policies with someone, consider how often they may use your car, how reliable they are, and what kind of driving history they have.

Spend time researching insurance companies for the best policy, and don't automatically go with the company with the lowest price. Instead, consider customer service reviews and available discounts and make a plan to divide the insurance premium fairly.