Homeownership costs are soaring, with the average monthly mortgage payment doubling over the past decade. Some millennials are tackling this challenge with an innovative approach: buying homes with friends.

One in 10 millennial homeowners (ages 28-43) has purchased a house with a friend, marking a significant shift from previous generations who typically bought homes either with a spouse or alone. While buying a home with a friend allows younger buyers to share costs, it can also introduce complexities into financial processes that weren’t designed for platonic partnerships. When your finances aren’t already intertwined with your homebuying partner’s, making significant decisions and completing paperwork can lead to confusion or even conflict.

When insuring a home with a friend, communication is key

The good news is that while buying a home with a friend can be challenging, insuring that home together is relatively straightforward. For friends who purchase a house jointly, the home insurance process is similar to that for married or single homeowners. Like couples, friends will need to align on their coverage needs, compare quotes, review offers, and choose a policy that fits their budget and home.

Rhys Subitch, a senior editor at Bankrate, recently became one of the millennials who insured a home with a friend. “The process was quite easy,” they say. “We used a marketplace to gather multiple quotes simultaneously and sifted through them to find one that suited our needs. I compiled what we qualified for and took quick notes on each company, then we discussed the cost versus coverage.”

According to Subitch, the toughest part wasn’t shopping for insurance; it was merging their new home insurance policy with an existing auto policy. “That issue stemmed more from their systems not integrating than from the fact that I bought with a friend.”

In other words, be prepared for potential delays when combining insurance policies with a friend. Discussing priorities, budget expectations, and risk tolerance upfront can help simplify the process.

How to include a friend on your homeowners insurance policy

If you and your friend co-own a home and both names are on the deed, you should both be included on the homeowners insurance policy as named insureds. This ensures that both of you have coverage for the jointly owned property, allowing you to file claims, modify coverage, or switch insurers if needed.

If the ownership situation is more complex—such as only one of you being on the deed—you may need to take additional steps to add the other person to the policy. Home insurance typically covers only the named insured, their relatives, and any dependents under 21. In this case, your co-owner may need to be added as an additional insured through a special endorsement.

While the additional insured won’t have the same level of control over the policy, they can still file claims if necessary. If you’re uncertain about how to add your friend to your homeowners insurance, consult your insurance agent about obtaining an additional insured endorsement and inquire about any potential impact on your coverage costs.

What type of homeowners insurance should I purchase?

Every homeowner has unique insurance needs. Since home insurance isn’t legally required, there are no strict guidelines on the type or amount to purchase beyond your mortgage lender’s requirements. Ultimately, your decision will depend on your home, belongings, and personal finances.

To determine how much home insurance to buy, consider these steps:

  • Assess Your Home: Evaluate the age of your home and roof, its square footage, and the materials used in construction. Additionally, think about how you use your home; for instance, if you frequently host gatherings, you may need a higher liability limit.
  • Create a Personal Property Inventory: Your home insurance will cover personal belongings like furniture, appliances, and clothing. Take inventory of what you and your friend need covered, and discuss with your agent any items like jewelry or art that may require additional endorsements.
  • Understand Replacement Cost vs. Actual Cash Value: Depending on your policy, you may have the option to choose between replacement cost and actual cash value (ACV) coverage.
  • Nail Down Your Budget: Knowing your budget flexibility can guide decisions on setting deductibles, adding policy riders, or choosing between ACV and replacement cost for specific coverage.