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The introduction of the British government’s ‘Rent a Room’ initiative saw homeowners able to earn up to £7,500 tax-free by taking in a lodger, so it’s not surprising that many people decided to do just that.
But if you’ve decided to rent a room in your own house or apartment to a lodger what does that mean for your home insurance? Are you still covered when you take in a lodger?
That largely depends on which home insurance provider you’re with.
Some insurance companies may be unwilling to insure your home if you rent one or more rooms to lodgers, because they view the property as higher risk when it includes occupants you don’t know.
But there are some other home insurance providers who will have no problem about insuring your home even if you do have lodgers, provided you disclose this information to the insurer.
So if you’re planning to rent a room in your home to a lodger it would be a good idea to compare home insurance quotes from providers that are happy to insure properties with lodgers.
Is lodger insurance mandatory in the UK?
However, home insurance might be mandatory from a contractual point of view, because if you have a mortgage on your home you could well find that your mortgage agreement includes a clause that requires you to insure the property.
However, it’s also worth bearing in mind that some mortgage lenders may not be happy about their homeowners taking in lodgers, so it’s important to double check this in the terms of your mortgage agreement too.
Why do some home insurance companies refuse to insure homes with lodgers?
Taking in a lodger changes your property’s risk profile, particularly if the lodger is someone you don’t know.
Some home insurance providers will view the added risk as something they are unwilling to cover, in which case they might refuse to insure your home (or void your policy if you take in a lodger after insuring with them).
Other providers might have no problem with the fact you’re renting a room to a lodger, although in many cases they will require you to take some precautions in order to offset some of the additional risk.
What sort of precautions might I be required to take when I’m taking out lodgers insurance?
The most common precaution homeowners might be required to take if they decide to take in a new lodger is to double check whether or not the lodger has any unspent criminal convictions, and to disclose those convictions to the insurer.
However, some home insurance companies might also require homeowners to install additional security features, such as locks on internal doors.
How much does lodger insurance cost?
Insurance providers use a wide range of variables in their insurance premium calculations, many of which will be specific to your property. For instance, your post code can have a significant impact on your premium, because it will be used to assess the crime rate in your local area.
Your property’s security system, size, and type of locks will be a factor too, so it’s impossible to predict how much you’re likely to pay for home insurance with a lodger without running a real comparison of home insurance quotes.
Is it true lodger insurance doesn’t cover burglaries?
Although it is sometimes possible to find standalone burglary insurance, the vast majority of standard home insurance policies do provide some level of coverage if you’re burgled.
However, one exception might be if there is no sign of forced entry, which can sometimes lead insurers to dispute the insurance claim, particularly if you have lodgers staying at the property or there are other factors that might make the property less secure.
In fact, some home insurance policies specifically exclude burglaries from coverage when there is no sign of forced entry and you have lodgers living with you.
How can I find the best deals on my lodger insurance?
Some insurance providers offer home insurance deals to new policyholders, so rather than accepting your existing provider’s renewal quote you should shop around for new lodger insurance quotes when your policy is up for renewal.
It’s also worth bearing in mind that some banks offer their account holders home insurance discounts when they sign up for a new policy, and a few even offer account holders free home insurance, so it’s worth checking with your bank before you compare lodger insurance quotes from other providers.