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How does a lodger affect your home insurance, and what insurance do lodgers need?
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.
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’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.
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.
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.
The approach taken to lodgers will vary from insurer to insurer.
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.
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.
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.
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