There's no specific lodger insurance policy, but you can get this type of cover added on to standard home insurance.
A lodger is somebody who's paying rent for a bedroom in a house you own and live in. If you want to earn a bit more cash and you have a spare room, it could be a good idea. But there are a few things you need to do before taking in a lodger,like letting your home insurance company know.
Yes, and in recent years many more people are. According to Landlord Zone, the number of homeowners taking on lodgers has tripled since 2009, due to:
If you're a homeowner with a mortgage, there's no reason why you legally can't rent out your spare room to a lodger. But you may need to get the lender's position first.
If you're a tenant in a single or shared property, it depends on your tenancy agreement. If you own a flat as a leaseholder, it’s always best to check with your management company.
Before taking in a lodger, it's best to make sure your home is set up in a good condition and you know your responsibilities to avoid the risk of having injury claims made against you. A home in a good condition includes:
If you ever need to make a claim and you've failed to inform your insurer, they could invalidate your insurance policy. This in turn might make it difficult to find another provider willing to insure you. Make sure you let your insurer know as soon as you decide to have a lodger in your home.
Insurers who include lodger insurance may only cover you based on a few conditions. These conditions include:
Most insurers tend to exclude cover for theft if there's no obvious sign of forced entry
Your insurer may want to increase your costs to take into account the extra risk a lodger brings in
If your lodger gets injured on your property, they may take you to court if they believe you're at fault. Having extra legal cover helps protect you from these circumstances
Background checks on your lodger may take place. Some insurers might not cover you if your lodger has a criminal background, or is a student, due to the higher risks they bring
It's more than just your home insurer you need to inform when taking in a lodger. Different people need to know depending on your circumstances, such as:
If you own your own home, it doesn't have any impact on your mortgage interest rate or monthly payments
If you're a leaseholder, leases can be complex and can have certain exclusions written into them
If you're a tenant, they may need to send a written agreement to the lodger if they agree to it, but they're within their rights to refuse
Having a lodger could affect your council tax, for example if you get a single person's discount. They also need to know if your home becomes a house in multiple occupation (HMO) due to having 3 or more tenants
If you earn more than £7,500 per year in rent you're liable to pay tax on anything over this amount, and have to complete a tax return
"The right kind of home insurance can either cover short term lodgers in your home, or longer term lodgers with formal tenancy agreements. In either case it will alter the way your insurer views your risk. For example, more people living in your home means an increased security risk or potential of accidents.
You must tell your insurer if you start renting out one of your rooms, as it could invalidate your policy if you're not clear who is living in your home."
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