Insurance is a means of protection from financial loss. It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss.
An entity which provides insurance is known as an insurer, insurance company, or insurance carrier. A person or entity who buys insurance is known as an insured or policyholder. The insurance transaction involves the insured assuming a guaranteed and known relatively small loss in the form of payment to the insurer in exchange for the insurer's promise to compensate the insured in the event of a covered loss. The loss may or may not be financial, but it must be reducible to financial terms, and must involve something in which the insured has an insurable interest established by ownership, possession, or preexisting relationship.
The insured receives a contract, called the insurance policy, which details the conditions and circumstances under which the insured will be financially compensated. The amount of money charged by the insurer to the insured for the coverage set forth in the insurance policy is called the premium. If the insured experiences a loss which is potentially covered by the insurance policy, the insured submits a claim to the insurer for processing by a claims adjuster.
Roommates can be a great way to save money, especially when you reside in an expensive urban area or you’re just out of college – but pick the wrong roommate, and you could get way more than you ever bargained for. In fact, that person could end up costing you plenty. Pretty much everyone who’s shared a home with a roommate has a horror story to tell. That’s because you never really know someone until you exist under the same roof with them. All habits, good and bad, are on display – from cleanliness (or lack thereof), to moods and character traits, to a person’s level of financial responsibility. Quite simply, moving in with someone is a big lifestyle commitment, both emotional and economic, that shouldn’t be taken lightly.
Millennials new to the roommate game are pretty much guaranteed to experience a few rude domestic surprises, but choosing the wrong roomie can have grave consequences, far more drastic than dirty dishes being left in the sink. A cohabitor who doesn’t pull his or her financial weight could destroy the relationship with your landlord, wreck your rental history and ruin your credit score. Not only could this leave you without a roof over your head (in the event of eviction), it could destroy your chances of obtaining a lease elsewhere.
Whether you’re moving in with a friend, seeking a random person to share your space or looking to move into someone else’s place, here are some crucial points to keep in mind.
The Important Checklist
1. Screen potentials. After all, you will be living with this person full time, so it's important you're both on the same page in terms of how you view (and maintain) your home environment. If you're sharing with an old friend with whom you have a personal rapport, then you have a good head start. If you're planning to share with a stranger or acquaintance, it's imperative you obtain the best possible sense of their personality and domestic habits.
Request references from their previous shared living situations and ask logical questions. Do they smoke? Are they house proud (or not)? Do they bring the party home? If possible, check out their current place of residence to see what condition it’s in to get an idea of their true domestic ways.
Since you're undoubtedly linked to Google, Facebook and other social media sites, use them to your advantage. Run your own background check on potential housemates. You might get a more accurate idea of whom you’re dealing with, what their work/nightlife habits are like and the kind of people they’re likely to bring home.
2. Suss out their financials. A glowing personality doesn’t necessarily reflect someone’s financial record (see How A Bad Roommate Can Ruin Your Credit Score). Just because your roommate agrees to pay half the rent and utilities doesn’t mean he/she actually will. If your roommate drops the financial ball, the fallout will have a direct impact on you. While there’s no guaranteed way to keep this from happening (other than living solo), there are precautionary steps you can, and absolutely should, take. Ask about their current financial responsibilities and work/income situation to gauge their financial suitability. You also have the right to do a credit check for your own peace of mind.
3. Share the load. Typically, all tenants residing in a home must have their names appear on the lease, and just as rent is shared between parties fairly, the same applies to utilities and household bills (see Renters' Guide: Living With Roommates). If the utilities are in your name, the onus is on you personally to ensure they get paid, so putting every renter's name on the utilities can make sense. Not only does it makes everyone’s financial obligation legal, it encourages better responsibility from your roomie because failing to pay affects his/her credit score too. Sharing the load also means sharing the tasks so that cleaning doesn't fall on one person.If that doesn't work, consider sharing the expense of a biweekly housecleaner.
4. If at all possible, rent a practical space. An adult-friendly layout creates a better sense of privacy, and larger bedrooms offer a place of personal retreat, allowing each of you some “me" time. Make a list of crucial features based on your lifestyle needs (such as a laundry room, your own bathroom and decent-sized closets), and ensure each property measures up. Otherwise, your way of life will feel compromised in the long run.
5. Do your due diligence. Do your homework on your space before you move in. Is there a history of bedbugs? Does the building have a roach problem? Is there a live-in superintendent who can swiftly tend to issues as they arise? Is the street noise bearable? A lease is a contractually binding commitment. Once you've signed on that dotted line, you can’t do a U-turn, so ask as many questions as you can to avoid nasty surprises when it’s too late to back out.
6. Back yourself up. Unforeseen living expenses can pop up. Summer A/C bills can go through the roof, for instance, so it’s important to have an emergency fund as backup (especially if your name is on the utility bill). In the event that you or your roommate loses a job, or if your roommate decides to move out, at least you’ll be able to cover the short-term burden.
Where To Find Them
Personal connections are the obvious way to start looking for a roommate. But what if yours don't yield any possible matches? You can search Craigslist and local newspaper ads, but Facebook offers a more personal platform through which to locate potentials for sharing a living space (it’s also a great way to weed out the weirdos). By posting with FB friends and spreading the word that you're looking for a roommate, they start the vetting process with any referrals. Also check out sites like Roommates and Roomster – designed to match you with your perfect roomie.
The Bottom Line
Whether you’re a roommate novice embarking on a shared scenario for the first time, or seasoned “roomie,” your home is your castle and your sanctuary. Whom you share it with will have a huge impact on your emotional security and financial reputation. You only have one credit history, so it pays to protect it by thinking ahead. Intelligent planning and thorough roommate screening are fundamental to maximizing the chances of shared-living success. Why waste time and energy learning the hard way when you can make smart decisions to begin with?
