Home insurance with lodgers – are there any differences?

If you’re considering renting out your spare room to earn some extra cash, there are implications for your buildings and contents insurance. You may need to update your home insurance if you have a lodger, or you may need to switch providers. Here’s what you need to know…

Helen Phipps

Insurance expert

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Last Updated 9 OCTOBER 2022

Can you legally rent out a room?

The first thing to think about is whether you can legally have a lodger. 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 and you might need to ask for permission from the landlord.
If you’re a leaseholder, check the terms of your lease. Again, you may need to ask for permission from the leaseholder.

You need to be careful to stay within what is permissible. If you’re not legally allowed to have a lodger, then even with insurance that covers a lodger you’re at risk of not having claims paid by your insurance provider.

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

A lodger lives in the your main home and shares the accommodation and facilities. If you don't live in the property, the person renting is a tenant. Tenants and lodgers have a different status in law, so you need to be clear what the situation is.

If the person renting has their own front door or only shares a hallway, for example in the equivalent of a granny flat, then they’ll be a tenant and you could need landlord insurance.

Why does having a lodger affect your home insurance?

How much you pay for your insurance depends on risk – for example, the risk of you getting burgled. That’s why some insurance providers will lower your premiums if you have better locks on your doors and windows.

Generally, insurance providers consider that a lodger is an extra risk. A lodger is one extra person with a key to your home, who you might not know much about. There’s always a risk that they might be careless, cause malicious damage or steal from you.

Getting home insurance for a lodger doesn’t mean getting a separate policy. It means changing your home insurance policy to take the extra risk into account. Some providers may not be willing to offer you cover if you have a lodger, so you may need to switch home insurance providers. You may be charged a fee for cancelling your policy part way through the insurance term.

What’s the impact on home insurance if I have a lodger?

If you get a lodger, you need to tell your home insurance provider about it. If you don’t, you could find that your policy is invalid should you have to make a claim.

If they agree to cover you, there are some things your provider might do:

Ask you to include extra liability insurance to cover you if your lodger takes you to court – if they fall down the stairs and injure themselves, for example.
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.

Increase your premium to take the extra risk into account.

On the other hand, they might refuse to cover you because they consider having a lodger is too big a risk.

It is possible to get home insurance with a lodger though. So if your insurance provider refuses to cover you when you have a lodger or charges more than you can afford, don’t worry – just compare home insurance with us to find an alternative insurance provider.

Did you know?

It’s estimated that over half of owner-occupied homes in England have two or more spare rooms. This means that millions of surplus bedrooms across the UK could potentially be making money for their owners.  

Who else needs to know you have a lodger – and why?

Your mortgage provider needs to know about any lodgers or you risk being in breach of your mortgage contract.
Your local authority needs to know if you have a lodger because it could affect your council tax.
You may need to fill in a tax return 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. But if you earn more than that in rent, you’ll need to fill in a tax return and send it to HM Revenue & Customs.
It might impact your benefits If you receive benefits of any kind, you should think about whether there are any financial implications of taking in a lodger.

If you need more help to understand your responsibilities when you take in a lodger, see the government guide Letting rooms in your home: a guide for resident landlords.

What other considerations are there when it comes to lodger 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, such as a fire or flood.

Do I need insurance as a lodger?

If you’re a lodger, or you’re considering renting a room in someone’s home, you may want to get contents insurance to cover the possessions you’re bringing with you. You shouldn’t need to worry about buildings insurance, as that will be covered by the person who owns the property.

Get a good deal on home insurance with a lodger

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

What our expert says...

“If you’re a homeowner or a landlord, you should first check with your mortgage lender to see if you’re allowed to rent out rooms under the terms of your agreement. If you’re renting, you will need to ask the landlord’s permission first too. You’ll also need to tell your home insurance provider, as your policy may become invalid if you’ve not declared that you have a lodger and ever need to make a claim.”

- Helen Phipps, Insurance expert

Frequently asked questions

Does my insurance cover my tenant’s possessions?

Your contents insurance covers your possessions, unless otherwise specified. Your lodger will need to take out contents insurance to cover their belongings.

Can I claim on my insurance if my lodger steals from me?

Some insurance providers will amend your policy when you take in a lodger to avoid paying this kind of claim. This might mean adding an exclusion for situations where possessions have been taken without a break-in or broken without an accident having taken place.

Will my home insurance cover more than one lodger?

This depends on the policy your insurance provider offers you. Check your policy or get in touch with them if you’re insure. If you’re taking in more than two lodgers who aren’t already in a family relationship (from different households), your home may fall into the HMO category (House in Multiple Occupation). This means it needs to meet higher standards of safety. Find out more about HMOs on the Government’s website.

Can I claim if a lodger doesn’t pay their rent?

Home insurance covers your home and possessions, not your rental income. Some landlord insurance policies have a rent guarantee clause, but these are usually aimed at landlords with tenants, rather than lodgers.