Many people are under the impression that their home insurance would automatically cover them if they choose to let a room out to a lodger. However, it’s not that simple, as the vast majority of insurers – especially those who advertise their products heavily on-line or in television campaigns – will not cover any property where there is a paying guest unless a landlord insurance policy has been taken out.

Why? Well, the three main concerns. Lack of security (as it is presumed that the paying guest will have a key to the property), the fact that the guest (or their guests) can just walk out with the homeowners belongings and finally, there are liability issues as all insurers include property owners liability as standard. 

Insurers do not like the additional exposure of people within the home other than family members. Similarly, many people whose children have grown up and left the family home are left with a home that they can easily utilise as a bed and breakfast concern. The very same issues crop up plus guests own belongings are not covered either.
 
In both these instances there is a requirement to have in place a suitable policy. In the case of a lodger or bed-sits (where the tenant will sign some sort of tenancy agreement), a Landlords Insurance policy is most accommodating, but beware that whilst insurers offer Loss of Rent cover following a claim, few also offer Alternative Accommodation cover – this covers the cost of the family having to rent or stay in a hotel following an insured peril (say, fire) whilst the remedial work is carried out.  This is a crucial part of any house insurance policy.

In the case of those who operate a bed and breakfast business, there are policies tailored for this very risk. Bed and Breakfast insurance policies will cater for the owner’s buildings, contents, the liabilities, and guest’s effects.

In both cases, however, it is worth pointing out that the landlord or the property owner must adhere to the law in respect of wiring, gas, smoke alarms etc and have the relevant certificates in place for the policy to function properly.

Active Insurance has been providing landlord insurance for let, buy-to-let property and bed & breakfast since 1993.