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Home insurance with lodgers

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.

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Can I legally have a lodger?

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:

  • Better tax allowances
  • Demand from renters due to lack of affordable housing
  • The pandemic changing living and working habits
  • Property owners needing more income, due to the rising cost of living

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:

  • All furniture meeting fire safety regulations
  • Gas appliances being checked on a yearly basis by a registered gas safe engineer
  • All electrical systems and appliances are safe to use and pass inspections

Does having a lodger affect my home insurance?

Yes, and your home insurance is likely to go up, because insurance costs are based on risk. And giving another person access to your home increases that risk.

Home insurance is there to cover your building and contents from any damage, loss or theft in your home. Some providers may not be willing to cover you for a lodger. So it's worth speaking to your insurer before considering renting your room.

If your current insurer doesn't cover lodgers, don't worry - you can still shop around with us for home insurance that does accept lodgers. Just be aware that you need to cancel your policy earlier than the end of the agreed contract, and you're likely to be charged a cancellation fee.

How does having a lodger impact my home insurance?

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:

  • Adding extra liability insurance - 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.
  • Vetting - 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.
  • Adding exclusions - most insurers tend to exclude cover for theft if there's no obvious sign of forced entry.
  • Increasing your home insurance costs - your insurer may want to increase your costs to take into account the extra risk a lodger brings in.

Who else needs to know I have a lodger?

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:

  • Your mortgage provider - if you own your own home, it doesn't have any impact on your mortgage interest rate or monthly payments.
  • Your landlord or freeholder - if you're a leaseholder. Leases can be complex and can have certain exclusions written into them.
  • Your landlord - 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.
  • Your local authority - 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.
  • HM Revenue & Customs - 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.

What’s the difference between a lodger and a tenant?

A lodger isn't the same as a tenant. The key difference is that a lodger lives with the landlord of the house, sharing a bathroom and kitchen. A tenant lives separately in a property owned by the landlord. In this case, the landlord needs landlord insurance instead of lodger insurance. Landlord insurance can also come with tenant default or rent guarantee insurance to protect missed payments or empty properties. There is no similar cover for lodgers.

There's also a big difference in legal rights of a tenant versus a lodger. Tenants typically have more rights due to their tenancy agreement, which gives them more security.

Landlords and tenants have different responsibilities in rental properties. The landlord needs to ask the tenant's permission within a minimum of 24 hours notice before accessing the property. The landlord can also only ask for access for repairs or maintenance work.

As a tenant, you have the right to refuse the landlord's access but only if this is under fair and reasonable grounds.

How many lodgers can I have?

From an insurance point of view each insurer has a different stance and may refuse cover or charge more, depending how many lodgers you have. When you compare with us you’ll see which ones will cover you, but it’s always best to contact them directly if you're unsure.

If you have at least 3 tenants living in your home alongside yourself, then your home then becomes a HMO. This means you need to apply for a licence from the local authority, and will have a stricter duty of care to your lodgers. This usually means further costs and increased regulations.

According to GOV.UK your home is a HMO if both of the following apply:

  • At least 3 tenants live there, forming more than 1 household
  • You share toilet, bathroom or kitchen facilities with other tenants

Are there alternatives to having a lodger?

You could consider Airbnb, but as with lodgers you need to get all the necessary permissions.

It's likely to be viewed as riskier by insurance companies and possibly lenders, due to the random nature and unknown background of your guests. So make sure you make your enquiries with both before you decide between this or renting to a lodger.

Becoming an Airbnb host could potentially earn you more money depending on what you charge and the demand in your area, but it's not a guaranteed steady stream of income like having a lodger. Most months will likely vary in occupancy and the price you can or choose to charge each night.

Do your research on your area's demand and nightly prices to compare how the figures stack up compared with renting the room to a lodger.

What our home insurance expert says

"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."

Matthew Harwood, Home & lifestyle insurance expert at Confused.com
Home & lifestyle insurance expert Confused.com logo

Do I need insurance as a lodger?

If you're a lodger, the property owner's insurance doesn't cover you or your belongings. Lodger insurance is there to protect your landlord's property or possessions from any damages.

Your possessions aren't your landlord's responsibility. If you want your belongings to be covered, you need to get your own contents insurance policy. If you're looking to just cover your belongings in your own room, contents insurance for one room may be better suited to you.

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