Home Contents Insurance for Lodgers

As property prices rise it means the amount of borrowing required to buy a home is also on the increase, consequently there are now many home owners struggling to make ends meet because of sky-high mortgage costs. For those in this situation, finding an extra income is probably the easiest way to ease some of the pressure on their finances. It may be that putting a few extra hours in at work is all that's necessary, or it might be that finding a second part-time job is required to give the family's finances a further boost. However, probably the simplest and most convenient way for any home owner to earn a little extra is by taking in a lodger, that is if they have the room to do so. Of the many already doing this approximately 1 in 5 say it was necessary in order to ease the burden on their finances, and if they didn't have the extra income the lodger provided they would now be finding it a real struggle to repay their mortgage.

The continued housing boom has also made it extremely difficult for first-time buyers and single people to get themselves on the property ladder, resulting in many having to live in shared or rented accommodation. For families this might mean finding a home and occupying it as tenants, whereas single people might only require a room in which case lodging with a family is the most feasible option. The irony of this, however, is that they stand a very good chance of lodging with someone who are themselves struggling to pay their mortgage, and are relying on the extra income provided by them to boost their finances.

With so many on the lookout for a place to live it means that there is never a shortage of suitable candidates willing to take up residence as a lodger. This is probably most noticeable in areas where there are large employers, university campuses, colleges and schools, as not only the students will need somewhere to call home but quite often some of their teachers will too. Likewise, with any large employer there is often a transient workforce attracted into the area who might also be looking for simple, clean and inexpensive accommodation, and becoming a lodger would probably be the most obvious choice for them as well.

Insurance Loss of Income

In most cases taking in a lodger is a very simple procedure. For a start there are no statutory rules governing homeowners like there are with tenancy agreements. The lodger is invited into the home on license and does not require a formal agreement. However, although one isn't required, it is highly advisable to have one in place, even if it's just for the purpose of insurance. Situations can arise, albeit very rarely, that a house is rendered uninhabitable, this may be due to fire or severe flood damage for example. In these kind of circumstances the lodger will most likely stop paying their rent, depriving the home owner of their extra income, and although loss of earnings is often covered in home insurance policies it will require evidence of its existence before it can be claimed for.

Rent A Room Scheme

Probably the best way to gain financially from taking in lodgers is to follow the guidelines set out in the rent-a-room-scheme. By conforming to these the home owner is then entitled to earn £4250 a year before paying tax. The rules set out are quite simple and state that:

- The lodger's room must be in the home owner's main premises.

- The lodger's accommodation must not have its own bathroom and kitchen facilities.

- The lodger is not allowed to run any kind of business from their rented room.

Home Insurance Implications

Although finding a lodger is a relatively simple process there are certain implications that the home owner needs to be aware of before taking one on. Firstly, they have to realise that they will be giving up a certain amount of privacy in their home, and for the first few weeks at least it might feel like they are sharing their home with a stranger. There can also be problems when unsuitable lodgers are allowed into the home, which is why thorough checks and references are a vital part of the screening process. There's also the mortgage company to consider, as some may actually disallow lodgers in the terms and conditions of their mortgage agreement.

Home insurance is another aspect to be taken into consideration. In most policies there is normally a condition that requires the policyholder to inform the insurer of any changes that are likely to affect the insurance. Taking in a lodger is certainly one of them. It might be that some home insurance policies cover visitors possessions but it is usually on a short term basis only. This, however, would not be of any use to a lodger as they are there on a more permanent basis, therefore their possessions will not be covered under the home owner's insurance.

By informing the insurers that you have a lodger you will not only be fulfilling your obligations to them but also give them the opportunity to re-asses your insurance premium. They might do this immediately or wait until the renewal date, depending of course on individual circumstances and the insurers being dealt with. Failing to notify an insurance company of changes can in some cases invalidate an entire insurance policy, or to a lesser extent it will certainly mean any claim made is more likely to be rejected.

Contents Insurance For Lodgers

In respect of contents insurance you will often find lodgers prefer to arrange this themselves. This is less problematic for the home owner as the responsibility then lies with the lodger to source the policy, pay for it and maintain their own inventory of items covered on the policy. They might also prefer to have the opportunity to shop around and look for the best insurance deals on the Internet, or simply buy a policy from an insurance company they have dealt with in the past. In any case though, they will have a wide choice as there are plenty of insurance companies willing to offer home contents insurance without having to buy it in a package along with buildings insurance. To save some time in searching we have brought together some of the most popular home contents insurance companies for you to compare. Just follow the link below.

Lodgers Home Contents Quote

Other articles relevant to this are: Home Contents Insurance | Buildings Insurance
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