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Lodgers insurance

Everything you need to know about insurance for lodgers

How does a lodger affect your home insurance, and what insurance do lodgers need?

By Esther Shaw

Published: 20 March 2020

Handing over house keys

Looking for home insurance?

Taking in a lodger is a great way to boost your income – but while renting out a spare room can bring in some extra cash, there can be implications for your home insurance.

Lodgers should obtain their own renters insurance separately to cover their belongings.

Am I allowed to take in a lodger?

Taking in a lodger isn’t as simple as buying a new bed and handing over some keys. There are lots of rules, but these are the very basics:

  • If you own your own flat or house, you are allowed to rent out a spare room. (Note, though, that if you still have a mortgage, you will need to inform your lender)
  • If you are a tenant renting from a landlord, you will need to check your tenancy agreement. You may need to request permission from your landlord to have a lodger
  • If you are a leaseholder, your rights will be determined by your lease. You need to check the paperwork to see whether you are permitted to get a lodger

You must abide by the rules

If you’re contemplating taking on a lodger, it may be tempting to turn a blind eye to what you are – and aren’t – allowed to do.

But if you rent out your spare room when you are not permitted to do so, you may find you have invalidated your home insurance, leaving your property and possessions at risk.

You could also find that any claim you need to make on your lodgers insurance may not be paid by your insurer. Withholding information about a lodger from your insurer counts as non-disclosure, so if you plan to rent a room, you need to be honest and open.

What exactly is a lodger?

Generally speaking, a lodger is someone who lives in the same premises as you, sharing facilities like a kitchen or a bathroom. A tenant, on the other hand, usually lives at a property you own but don’t live in.

Someone who lives in the same property as you but doesn’t share living space beyond a hallway also counts as a tenant.

The distinction is important, because lodgers and tenants have different legal rights. A lodger is not allowed to have ‘exclusive occupation’ – meaning they cannot have a lock on their door, or prevent you from accessing it.

If the person staying with you is a tenant, you will need to register as a landlord, place their deposit in an authorised tenancy deposit scheme, and look into landlord insurance. If the person staying is a lodger, you do not need to do this.

How does having a lodger impact on my home insurance?

Insurers calculate insurance premiums based on risk, and may view a lodger as an extra risk. This is because you are giving access and responsibility for the security of your home to someone you do not know. Insurers may have concerns about lodgers causing damage around the home, leaving doors unlocked, or potentially even stealing things.

Do I need a new home insurance policy if I have a lodger?

The approach taken to lodgers will vary from insurer to insurer.

  • Some will be happy to continue to offer your home cover, but may increase your premium to factor in the extra risk
  • Some will add exclusions – such as stating that you might not be covered for theft or loss of items without evidence of forcible entry into the home
  • Some will make stipulations – perhaps your lodger cannot be a student, or have criminal convictions
  • Some insurers will refuse to cover you outright due to the increased risk

Compare home insurance for lodgers

If your current insurer refuses to insure you – or increases the premium to a price you can’t afford – then you need to take action and find a new provider.

The best way to get home insurance is by comparing policies with MoneySuperMarket. Simply give us a few details about yourself and your home, and we’ll do the rest, providing you with a range of competitive quotes from dozens of providers.

While you shouldn’t struggle to find cover from a standard insurer, if the search is proving difficult, you could also consider a specialist ‘lodgers insurance’ policy, specifically designed for people letting out rooms.

Features might include cover for accidental damage to your own possessions as well as liability insurance. The latter will cover you against the risk of your lodger injuring themselves, or having their property damaged, and holding you liable as their live-in landlord.  

Note that while you could also take a look at landlords insurance, this is unlikely to cover the specific risks you face when letting a room to a lodger, as this is designed for property you let to tenants.

Do lodgers need their own insurance?

Generally speaking, your home insurance will only cover your contents and possessions – and not those belonging to your lodger.

Lodgers should obtain their own contents cover for their belongings separately.

Do I need to tell my mortgage lender about a lodger?

If you have a mortgage, you need to check with your lender that taking in a lodger does not put you in breach of the loan conditions. While some lenders will permit you to rent out a spare bedroom, others will not. You need to check the terms of your mortgage – and speak to your lender to get their consent.

Other things to consider

  • Your council tax could change: If you live on your own, your entitlement to a single-occupancy discount will end if you rent out a room to a lodger
  • You may have to complete a tax return: If you provide your lodger with a furnished room and do not get more than the ‘Rent a Room Scheme’ scheme threshold of £7,500 a year, you will not have to pay tax on this. But if you receive more than this, you will need to complete a tax return and send it to HMRC

Looking for home insurance?