If you’re considering renting out your spare room to earn some extra cash, there are implications for your home insurance. Here’s what you need to know…

Can I rent out a room?

It depends on your living arrangements:

  • If you own your home, then there’s no legal reason why you can’t rent out your spare room.
  • If you have a tenancy agreement with a landlord, you’ll need to check what the agreement says.
  • If you’re a leaseholder, then you should check the terms of your lease.

What’s the impact of a lodger on my home insurance?

Firstly, you’ll need to tell your home insurance provider that you’re renting out a room. If you don’t, you could find that your policy is invalid should you have to make a claim.

You may have to pay extra to extend your cover. Your provider could ask you to include extra liability insurance to cover you if your lodger takes you to court – they fall down the stairs, for example, and injure themselves.

Your insurance provider may add exclusions to your home insurance. For example, you might not be covered for theft from your home if there’s no obvious sign of a break-in.

It’s possible that your provider might actually refuse to cover you because they consider having a lodger is too big a risk. If that happens, use our comparison service to help you find an alternative insurance provider.

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What other considerations are there when it comes to home insurance?

Check whether your insurance will pay for alternative accommodation for you and your lodger if your home becomes uninhabitable because of an event you’re insured for, so a fire or flood, for example.

And be aware that, in most cases, your lodger’s possessions won’t be covered by your contents insurance. Your lodger will either need to organise their own contents insurance or you’ll need to revise your policy to cover them.

Who else needs to know I have a lodger?

  • If you have a mortgage, then you should inform your provider or you risk being in breach of your mortgage contract.
  • You’ll need to inform your local authority because it could affect your council tax.
  • If you sign up to the Rent a Room scheme, you can earn up to £7,500 per year in rent (or £3,750 if you’re letting out a room jointly) without having to pay tax. However, if you earn more than that in rent, you’ll need to fill in a tax return and send it to HM Revenue & Customs.
  • You should also think about whether there are any financial implications of taking in a lodger if you receive benefits of any kind.

Get a good deal on your home insurance

If you’re considering taking in a lodger, you’ll want sufficient home insurance to give you peace of mind. That’s where we can help. Compare home insurance with us and we’ll search insurance providers to find you great-value cover that meets your needs.