Use caution when picking your roommates as it may possibly affect your insurance rates.
The last thing most people consider when looking for roommates to share expenses is car insurance. However, most insurance companies will require you to list everyone in the household that is of driving age. This could significantly impact the cost of your car insurance even if you have a good driving record.
- Before looking into advertising for roommates, check with your auto insurance company to see if they allow exclusions for drivers and in what circumstances. Every state has a different rule or guideline that the insurance companies have to follow.
- If you discover you have the ability to exclude drivers, it usually is still with the stipulation that the other person has their own insurance or their own car. You will want to make sure that your prospective roommate has their own method of transportation and/or is listed as a driver on someone else’s policy (must have a copy of the proof in order to make it fly with your insurer).
- If you are unable to exclude drivers, include a requirement to have a copy of any prospective roommate’s insurance policy, a copy of their driving history, and a “Letter of Experience” from their insurer noting any claims on file. That way your car insurance premium will be less affected if you are required to list them.
- No matter what category your roommate falls under, do not, under any circumstances, loan out your car. It might be common among close friends and roommates to share their vehicles, but one bad trip can cause you a lifetime of grief. If your roommate accidently runs a stop sign or rear ends someone, depending on the severity of the other party’s injuries, you could end up paying out of pocket for many years.
Many young adults are willing to loan out their cars to friends who need a quick ride to the store or help getting to a job or class, but be sure to carefully consider the impact of this decision before making it. You cannot be sure that your friend won’t accidentally injure someone, and as the owner of the vehicle, you are entirely responsible. Carefully choose your roommates as you would your close friends so that you don’t end up paying for someone else’s mistakes.