If you’re a renter looking for stylishly furnished spaces with amenities such as wi-fi, gym and laundry, but without the hassle of finding a place and roommates to share the renters insurance with, then co-living might be a good fit for you.
Often marketed to young professionals, artists, travelers and digital nomads who are seeking a sense of community, co-living can be a practical and cheaper alternative to traditional renting.
Generally, co-living is a model where you rent a private bedroom and share common spaces, such as the living room and kitchen. You’ll pay your rent to a co-living company, which not only manages the space but also finds roommates, maintains the utilities, and even schedules community events like group dinners and karaoke nights.
Co-living is gaining in popularity, growing from 100 bedrooms in 2014 to nearly 8,000 in 2019. There are 54,000 more bedrooms in various stages of evaluation and development, according to Cushman & Wakefield, a global real estate services firm. But for all the problems co-living can solve, it won’t solve problems like house fires and theft.
That’s where renters insurance comes in. If you’re thinking of renting a co-living space, you want to have the best renters insurance for your personal belongings and other types of problems. Here’s a guide to renters insurance for co-living.
| Company | Current estimated U.S. co-living beds | Estimated co-living beds in evaluation and development |
|---|---|---|
|
Common
|
2,400
|
17,600
|
|
Open Door
|
255
|
11,850
|
|
The X Company
|
1,600
|
7,800
|
|
Society
|
1,200
|
7,500
|
|
Starcity
|
500
|
5,200
|
|
Quarters
|
530
|
1,800
|
|
Ollie
|
700
|
1,570
|
|
Node
|
355
|
1,250
|
|
The Collective
|
125
|
1,000
|
|
WeLive
|
510
|
N/A
|
|
Total
|
7,820
|
54,350
|
Source: Cushman & Wakefield
What Does Renters Insurance Cover for Co-Living?
Renters insurance for co-living works much like renters insurance in a traditional landlord-tenant arrangement. A co-living company’s insurance will typically cover the actual building for problems like fire and tornadoes, while your renters insurance will cover your personal belongings.
Renters Insurance for Your Personal Property
In a co-living space you may be renting a furnished unit, but you’ll still have your own items like a smartphone, laptop, clothing, jewelry and maybe an acoustic guitar for those impromptu rooftop jam sessions. Personal property insurance covers your personal belongings in cases of problems like theft, fire, smoke damage, vandalism and explosions.
When you purchase a renters insurance policy, you’ll be able to select your policy limits, such as $10,000 for personal property coverage.
Think you don’t have a lot of stuff worth value? Renters often underestimate how much they actually own. Many renters who do home inventories find out they own around $10,000 to $11,000 worth of stuff, according to Josh LaRoche, a spokesperson for Toggle by Farmers Insurance. If you were to lose everything in a worst-case scenario like a fire, would you be able to replace everything without renters insurance?
If you don’t own much stuff, lower your personal property coverage to your insurer’s minimum, suggests Yael Wissner-Levy, a spokesperson for Lemonade Insurance, Just make sure the minimum is adequate to cover all of your belongings. A good way to figure out how much coverage you need is by creating a home inventory.
What if you only care about one important item or two? LaRoche says Toggle offers a minimum of $1,000 in personal property coverage and gives co-living renters the flexibility to micro-target specific items. For example, you might want coverage only for your laptop, smartphone or gaming system.
One last thing to consider is the choice between replacement cost versus actual cash value (ACV) coverage. Replacement cost is more expensive but it’s better because it doesn’t take depreciation into account in a claim payment. For example, if you bought a laptop for $1,500 and it’s destroyed in a fire, replacement cost would pay to buy a new laptop. ACV would only pay the depreciated value of the laptop.
Liability Insurance for Co-Living
What happens if you damage someone else’s property or someone gets hurt while visiting your co-living space? That’s where liability insurance comes in. It pays when you’re responsible for property damage and injuries to others. It also pays for a legal defense in case you’re sued.
Even if you’re only renting a bedroom in a co-living space, that doesn’t decrease your need for liability insurance, says Wissner-Levy at Lemonade. “If a guest is injured in a shared living room, the liability could potentially fall on anyone living in the space at the moment,” she cautions.
LaRoche at Toggle agrees that liability insurance shouldn’t be overlooked. He offers a scenario where your culinary skills accidentally result in a fire. Your liability insurance would kick in to cover the damage and any injuries. And having your renters insurance company pay for a legal defense or negotiate a claims settlement is an underappreciated benefit.
“One thing you’ll find in claims is that they can go after your income and assets. Even if it’s negotiated down, it’s still a stressful process. Liability coverage can keep you out of that mess, and you have people working on your behalf who can help you navigate that process,” says LaRoche.
When deciding how much liability coverage you should buy, LaRoche recommends you consider your assets and income, which is essentially what you could lose in a lawsuit. He adds that as those grow over time, you’ll want to increase your liability coverage.
Additional Living Expenses When You Can’t Live in the Co-Living Unit
If you can’t live in your co-living unit because of a problem covered by your renters policy, additional living expenses coverage pays for expenses such as hotel bills, restaurant meals and other extra costs (like laundry service). This coverage is also referred to as “loss of use.”
What’s Not Covered by Renters Insurance for Co-Living?
Renters insurance policy won’t cover the physical building you’re living in. Your co-living company’s insurance covers the building structure and common areas, such as hallways and stairwells outside the apartment.
Renters insurance doesn’t cover problems caused by floods, earthquakes or mudslides. If these problems affect your area, you might want to consider extra insurance. For example, if you store valuable items in a basement storage space, you won’t be covered if they are damaged by a flood.
1
Lemonade
$160
28 states + DC
How Much Does Renters Insurance Cost?
The average cost of renters insurance is about $16 a month, or $193 per year, according to Forbes Advisor’s data. This includes $20,000 in coverage for belongings (with a $1,000 deductible) and $100,000 in liability coverage. If you need more coverage, you can typically purchase higher limits.
The cost of renters insurance will vary depending on:
- Your city
- How much coverage you select
- The deductible amount you choose
- High-value items that need to be scheduled (like expensive jewelry)
- Home security systems, smoke alarms and sprinklers in the co-living space
- Past renters insurance claims you’ve made
If you have a car, you can typically get a discount by bundling auto insurance with renters insurance.
Will Renters Insurance Cover Co-Living Roommates?
Your renters insurance policy typically won’t cover roommates and their property unless you add them to the policy. If you want do that, here are a few things to keep in mind:
- Your coverage limits might not be adequate. If you add another person and their belongings to your policy, you’ll likely have to raise the policy limits in order to have enough coverage.
- Insurance claims checks will be made out to you and your roommate. If you’re sharing a policy, the check for any insurance claims will be made out to both of you.
- Claims made on a shared policy go on your claims history. If your roommate makes a claim, it’s also going to show up on your claims history. Insurers look at claims history when setting rates, so this could end up affecting you in the future.
Let’s face it, there’s a lot that’s out of your control. Especially if you live with other people.
Renters insurance is an affordable way to protect against the possibility of going broke if your stuff is destroyed or you’re sued.
See Forbes Advisor’s ratings of the best cities for renters.
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