This time we are putting Mark Hutchings, sales and marketing director at Berkeley Alexander, on the spot with the following question:
Q: I have seen increasing numbers of clients take in lodgers in recent months. What is the impact of this when advising on home insurance policies?
A: A side effect of the recession has been a significant increase in homeowners taking in lodgers to assist with paying ever increasing food, fuel and utility bills.
Indeed, new research recently published by LV= estimates that the number of UK households with lodgers has almost doubled in 2012 to 954,000.
However, how many of these households realise that such a change in circumstances could impact on their home insurance cover and that failure to inform their insurers could result in claims being refused?
A standard home contents insurance normally gives cover for the policyholder’s ‘family’ which refers to ‘husband, wife, partner/civil partner, children and other relatives who permanently live at the home’. A lodger would not form part of this policy wording definition and therefore would have no contents cover under the policy.
However, and just as importantly, some insurers will not provide either buildings or contents cover where lodgers are in place whilst others may apply a premium loading or restrict theft cover.
Households that currently have lodgers in the UK must therefore tell their home insurance provider of the additional person in their household to prevent having a claim repudiated.
This increase in lodgers offers real market opportunities for brokers. As an adviser it is your job to keep up-to-date with any changes in the circumstances of your clients.
Now is a good time to contact clients and ensure that if they have a lodger or are planning to take in a lodger that they have the correct cover in place.