Adding a Roommate to Your Car Insurance Policy

It's important to add roommates to your car insurance policy if they drive your car. Not listing drivers on your insurance policy could result in future claims being denied.

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A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Jun 23, 2020

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Here's what you need to know...

  • Insurance companies want to list and charge appropriately for every driver in your home
  • Insurance regulations differ from one state to another and different companies have different methods of adding others to an insurance policy
  • Adding your roommate to your car insurance policy can provide extra protection in the event of an accident while he or she is driving your car

If you live with another person, not only can you add that person to your car insurance, but you should!

You will notice that when you are looking for a quote for car insurance coverage, one of the questions asked by every insurer is about the driving history of all the drivers in your household.

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The Impact of Adding Another Person to Your Insurance Coverage

If you are adding another driver to your insurance coverage, it may or may not affect the cost of your premium. If the person has significant driving experience and has a good driving record, chances are there will be minimum to no charge for the addition to your policy.

However, if you are adding a new driver, a young driver, or one with a less than stellar driving record, expect changes to increase your premium.

Drivers under the age of 25 will be costly additions to your insurance, especially male drivers. If you add someone who has accidents or tickets in the past three years on their driving record you will find that your policy could increase anywhere from slightly to substantially.

If the other person you are adding to your policy has a very serious offense like a DUI or a very bad driving record, you may find that the addition puts your policy into the high-risk category, making it virtually impossible to afford.

In this case, you may want to talk to your insurance company about a policy that excludes that person from coverage. Insurers are more likely to consider such an option if the other person who shares your home has his or her own vehicle insurance coverage.

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Reasons to Add Someone to your Car Insurance Policy

If your roommate drives your car frequently, then it is imperative that you add them to your car insurance policy which will help in case of any incident involving your car.

Even if your roommate will not be driving your vehicle on a regular basis, it is advisable to add them as an occasional driver to your existing car insurance.

According to the Cornell University Law School’s Legal Information Institute, not having insurance can lead to great financial loss. If your roommate causes an accident while driving your car and they’re not covered under any insurance policy, you’ll be on the hook for all damages they caused.

Additionally, you may also have to pay for any injuries suffered by your roommate and any other people involved in the accident.

When adding your roommate to your insurance policy, you need to ensure a few important things:

  • First, you need to make sure that they have a valid and unexpired driver’s license.
  • Second, you need to confirm that they do not have any traffic violations or prior history of accidents.
  • Third, you can also have a written contract from your roommate that will hold them legally responsible for any damages that may happen while they drive your car. However, such a contract can only be legal only if notarized.

Consequences of Not Adding a Person You Live With to Your Car Insurance

By not listing someone who lives with you and drives your vehicle on your car insurance policy, you are committing fraud.

If a claim happens through his or her use of your vehicle you will be facing not only the possibility of the claim being denied, but also the possibility of your policy being canceled for fraud.

If it is obvious that you fraudulently took out a policy and neglected to provide information concerning a member of your household because you knew it would impact your premium, your insurance company can cancel your policy.

A cancelled policy makes it much harder for you to get reasonably priced coverage in the future because you are deemed high risk.

What is the coverage given when I add my roommate to my car insurance?

Before you add your roommate to your car insurance policy, it’s important to know what type of coverage you’ll need. For instance, some insurance providers will not pay any liability damages beyond your insured limit.

The coverage that you will receive will only relate to the property damages caused by your vehicle.

Furthermore, if you are the car owner, your liability insurance will also cover the legal fees incurred in-case you are sued.

It may happen that your roommate takes your car without your knowledge or without permission and gets into trouble with the law. In this particular case, you are protected because the incident occurred without you having any knowledge of it.

As far as insurance goes, your car insurance provider will cover the damages sustained by the car or the driver.

Nonetheless, many insurance companies will automatically assume that you had prior knowledge of the car being taken unless you have strong proof to back your statement. Therefore, when you want to know the car insurance rates, be sure to ask for the premium that you may have to pay based on your roommate’s driving history.

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Shopping for Car Insurance

Anytime you make changes to your car insurance that cause a change in premium, it makes sense to shop around for prices from different insurers so that you can find out if your insurance company is charging you a competitive price. Get as many prices as you can from a variety of insurance companies that write policies in your part of the country.

In order to do so in the most efficient and effective way possible, opt to use a free online quote tool. Such tools collect the necessary information about your insurance needs, your vehicle, and those who will be using it, and submit that information to multiple car insurance providers.

You will quickly start to receive quotes that are personalized to your needs. Take the time to carefully compare them. Expect to see variations in price as each insurance company has its own guidelines concerning discounts and rate setting.

However, if a quote is significantly lower than everyone else, look carefully at the details before going for it. There may be things excluded or limitations on the policy that other insurance companies do not have.

Prior to taking out a new car insurance policy, take the time to look into the financial stability of the insurer and its customer service track record.

In order to learn what the company’s financial status and projected ability to meet financial obligations in the future is, get its rating from one of the independent insurance ratings companies.

Companies such as A.M. Best or Standard & Poor’s assign a letter grade to all insurance companies for such things. You can also learn about how an insurer treats its customers by doing an online search for reviews and complaints about the company.

Take the time to do your homework. Just enter your ZIP code to start comparing FREE quotes!

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