Rent a room insurance is a specialist form of cover useful for any householder – homeowner or tenant – who takes in and lets a room or rooms to lodgers.
As a form of lodger insurance, it offers essential protection against a number of risks faced by the landlord or householder and may provide a vital defence for those taking advantage of the government’s Rent a Room scheme – although it is by no means limited to such householders.
The Rent a Room scheme is part of the government’s efforts to increase the availability of affordable housing by encouraging households with the spare capacity to rent out a room to one or more lodgers in return for tax-free allowances of up to £7,500 on the income earned from the rent they pay.
What makes rent a room insurance so special?
Like most forms of property insurance, the cover you buy needs to be appropriate to the use to which the premises are put. If you are:
- the owner-occupier of your own home, for instance, you need standard home building and contents insurance;
- if you are the landlord of buy to let property, you need landlord insurance;
- if you are a tenant, you need contents insurance to safeguard your personal belongings; but
- if you are a live-in landlord, with lodgers under your roof, you need live-in landlord insurance.
These distinctions may also help to understand the essential difference between tenants and lodgers. Tenants typically occupy entirely separate, self-contained accommodation; when you have someone lodging with you, however, they are sharing your home and its facilities.
It is this that makes the fundamental difference of lodger insurance.
In just the same way as regular home insurance and landlord insurance, live-in landlord insurance also protects the structure and fabric of the building against such significant risks as fire, storm damage, flooding, impacts, vandalism and theft.
It also indemnifies you against those liabilities you may face as a landlord – if a lodger is injured or has his or her property damaged and holds you responsible, you may be sued for substantial compensation. Lodger insurance typically indemnifies you against such claims.
Where live-in landlord insurance may differ from other forms of property insurance is in the additional attention paid to cover for the contents of your home. When you have a lodger in your home and sharing its facilities, your own possessions may be more vulnerable to loss or damage – and it may be worth ensuring that your contents insurance also covers accidental damage.
Insuring your contents against theft may also take the special characteristics of live-in landlord insurance. Many regular forms of home insurance and landlord insurance require evidence of a break-in or attempted break-in when considering claims for theft. Exceptionally, therefore, your lodger insurance recognises that there is someone already living in your home, and if they are irresponsible enough to steal from you, there is clearly going to be no evidence of a break-in or attempted break-in.
Rent a room insurance, therefore, is likely to offer an ideal solution for anyone offering to let a spare room in their own home to a lodger.