Renting a room in your house can be an easy way to save on mortgage costs and top up your income, if you have the space. So do you really need landlords insurance? This article will look at the most common issues you must consider when renting out rooms in your own residence, and how to quickly avoid the costliest problems.

Thinking about sub-letting your house?

Government incentives allow home owners to sub-let rooms in their own homes to lodgers, helping both people looking for inexpensive accommodation find places to live and property owners to supplement their income to the tune of around 4000 pounds a year, depending on where you live.

Sounds great, but have you considered all the details? It’s common when talking about investing in buy to let properties to think about having adequate insurance to cover you from bad tenants, repairs and other financial pitfalls, but do you really need it if you’re only subletting a room in your house? Landlords insurance can be costly, so is it really something you can skimp on?

Are you covered?

Whilst there’s no legal requirement to have landlords insurance, it does offer additional protection that can be well worth it in a wide variety of circumstances. If you simply rent out a room in your house, chances are this will be adequately covered by your existing buildings insurance. However, you probably aren’t covered for any situations that may arise with your lodger – by sub-letting you become a landlord and are running a business in many respects, even if it’s a small one. And that’s where the problems can arise – dealing with lodgers can become more complicated than you might think.

Generally speaking, your lodgers or tenants should be providing their own contents insurance. Additionally, it is probably unwise to let your lodger store anything of high value on your premises, as it makes your home a more likely target for burglaries. Also, make sure you check if you’re obliged to provide alternative accommodation in the event that a fire or flood damages your property – the last thing you want is to be paying out to house somebody elsewhere, whilst trying to repair your own home as well.

Are you insured against fraud and lawsuits?

There’s an increasingly litigious culture in the UK and a growing number of lawsuits are being filed against landlords for frivolous reasons. Have you insured your property against this? If you rely on the income generated by your lodger, then non-payment, property damage and the legal costs involved in evicting a problem tenant can add up fast. However, it is possible to insure against loss of earnings from such events, and whilst this doesn’t remove the emotional turmoil, it certainly gives you peace of mind that the bills will be paid in the end.

Is your property safe?

Something that’s a non-issue for yourself personally is any injury or damage caused by your property. If you hurt yourself in a hotel, for example by touching faulty wiring or falling down damaged stairs, you could quite rightly sue the owner. The same situation can occur in your own house – all those little repairs you’ve been putting off could become a serious problem if something were to happen to your lodger as a result of your negligence. Fix it first before advertising for a lodger and make sure that your rooms are compliant with all the relevant safety requirements – carbon monoxide detectors, fire escapes and sound electrics are all essential safety checks to complete up front.