Home Insurance With Lodgers | Saga Home Insurance

Inviting a lodger to live with you can be fruitful, with the government’s Rent a Room scheme letting you earn up to £7,500 tax-free income through rent each year.

If you’re thinking about renting to a lodger, it’s worth understanding how lodger insurance works. This type of insurance is there to protect landlords when they invite someone to live in their home.

What is lodger insurance?

Lodger insurance is a type of home insurance for live-in landlords with a lodger in their home. It accounts for the additional risks associated with having lodgers, offering coverage for accidental damage and theft.

Are you legally allowed to have a lodger?

Homeowners are legally allowed to invite lodgers into their homes. But there are a few things to check before pressing ahead:

Review your mortgage agreement to see if you need the lender’s permission
Check the lease agreement on a leasehold property, as you may need the freeholder or landlord’s consent.

For tenants, there are also some checks to make before agreeing to take on a lodger, including the following:

Review your tenancy agreement to see if you need the landlord’s permission
Inform your landlord if your tenancy agreement specifies you must report household changes, including inviting a lodger.

As a tenant, it’s always worth communicating with your landlord. This proactive approach helps you avoid the risk of eviction.

Is there any difference between a lodger and a tenant?

When it comes to rented housing, you’ll hear the terms ‘lodger’ and ‘tenant’. But what are the differences between these living situations?

Lodgers live in a room or property that’s owned by someone else while the owner also lives there
Tenants rent a room or property from a landlord, but the landlord lives elsewhere.

The key feature of a lodger arrangement is that the landlord lives in the same property. Lodgers may occupy a spare room or a portion of the property, and the landlord can charge rent or not at their discretion.

Insurance note: If you have a live-in lodger, you’ll need lodger insurance to protect you from the increased risk of damage to your property and possessions.

A tenant rents a room or property from a landlord. Unlike a lodger, the landlord doesn’t live in the same property. Tenants have exclusive use of the space and pay rent to the landlord.

Insurance note: If you have tenants, consider landlord insurance, which covers properties you rent out. Saga Landlord Insurance includes building insurance, contents insurance, cover for accidental damage and legal expenses.

It’s worth noting that tenants can also insure themselves with renters and tenants insurance, which covers their personal possessions.

How does having a lodger affect my home insurance?

As soon as you agree to welcome a lodger into your home, let your home insurance provider know. If you don’t, you risk invalidating your policy.

Introducing a lodger can lead to adjustments in your insurance premium and sometimes to the terms of your policy. Having another person in your home increases the risk to your property and its contents. Unfortunately, not everyone’s intentions are honourable, and intentional damage or theft of your belongings can be more likely if you share your space with a lodger.

Do I need a specific lodger insurance?

You will need to check the terms of your current policy and speak to your insurance provider to see what cover they can offer.

The landlord’s lodger home insurance doesn’t cover the lodgers’ possessions. If you’re a lodger, consider contents insurance to protect your belongings if they’re damaged or stolen.

How many lodgers does insurance cover?

Your insurance can cover more than one lodger, depending on the policy. Providers can offer different terms, so it’s best to contact your provider and ask.

If multiple lodgers who aren’t part of the same family move in, your home can be classed as a House in Multiple Occupation (HMO). You can find more information about HMOs on GOV.UK.

Rent a room checklist

If you decide to invite a lodger to live with you, there are a few key things to consider.

Contact your mortgage lender and get permission if required
Contact your local authority, as having a lodger may impact your council tax
Consider your tax obligations if your annual rental income exceeds £7,500. In this case, you’ll need to declare the income in your tax return. The government’s Rent a Room scheme allows tax-free earnings up to £7,500 a year
Contact any benefits providers to find out if having a lodger impacts them
Conduct background checks, including employer references and criminal history. If a lodger steals from you and there’s no sign of forced entry, your insurance policy may not cover the loss.