- 26% of Brits running an ‘earn from your home’ scheme haven’t considered that their activities might invalidate their home insurance;
- 11% of people earning money from their home haven’t received permission from their mortgage lender, landlord or housing association.
Gocompare.com Home Insurance is warning people to check with their home insurer, landlord or mortgage provider before renting out all or part of their home or starting a home-based business - or risk invalidating their insurance and breaking the terms of their lease or mortgage agreement.
The warning comes as new research reveals that many people haven’t considered the impact their home money making activities may have on their lease, mortgage agreement or home insurance.
The survey of 1,800 UK adults, commissioned by Gocompare.com Home Insurance, revealed that a third of Brits have tried to make money from their home including renting out a spare room to a lodger (7%), fitting solar panels to their roof (6%), opening their home to pet boarding (3%), renting a room to a short-term guest through sites such as Airbnb (2%), running a beauticians or hairdressing business from home (2%) and renting out a parking space, driveway or garage (2%).
The survey also found that:
- 26% of people running an ‘earn from your home’ scheme haven’t considered that their activities might invalidate their home insurance;
- 18% said that they had not informed their home insurer about their home business venture;
- 13% had not considered whether they would need to be licenced to run their home business (e.g. health and safety, food hygiene);
- 11% of people earning money from their home haven’t received permission from their mortgage lender, landlord or housing association;
- 6% said they had made an insurance claim as a result of their home business activities – 4% of these claims were declined, 2% were settled;
- 3% of those engaged in a home-based money making scheme have had damage to their home or belongings as a result of their activities;
- 3% admitted that their money making activities had got them into trouble with their mortgage lender, while 2% had got into trouble with their landlord/housing association;
- 2% said that their insurer refused to cover them for the activity they wanted to pursue.
Home-based money making schemes:
If you own your home with the help of a mortgage, then you’ll need to check with your lender to make sure your plans don’t breach the terms of your mortgage agreement. Likewise, if you rent your property, you may need permission from your landlord and will need to make sure that you’re not breaking the terms of your tenancy agreement.
You should also check the implications for your home contents and buildings insurance. If you don’t tell your insurer and need to make a claim then your insurer may refuse to pay the claim and your insurance could be invalidated.
Renting out all or part of your home:
Home insurance premiums are, in part, based on who lives in the property and what the property is used for. So, your insurer will want to know if you plan to rent all or any part of it - even if it’s on a short-term basis. Insurers may refuse cover, charge an extra premium or restrict the cover provided. You should also check whether you have public liability cover with your home insurance which generally covers you if anyone injures themselves on or around your property.
Installing solar panels:
Solar panels are typically covered under buildings insurance and you will need to talk to your insurer to check that your buildings sum insured covers the value of the panels.
Running a business from home:
Your home insurer will want to know the nature of your home business, whether you have regular business-related visitors, specialist equipment or store business stock. If your business is mainly clerical based then this will probably have little impact on your home insurance. A business with regular business-related visitors – such as an accountant or a beautician business – will have a bigger impact on your cover/premiums and you may well need public liability insurance or specialist cover for business equipment or stock kept at home.
Damage caused by pets is a common exclusion under standard household insurance, so if you are looking after other people’s pets in your home, you may need to upgrade your insurance or buy a specialist policy. You should also consider public liability insurance and specialist cover for liability (e.g. accident or illness) to the pets in your care.
Commenting on the research, Ben Wilson, Gocompare.com’s home insurance spokesman said, “For many people, making extra cash from their home – whether it’s starting a home-based business or renting out all or part of their property – is an attractive proposition and can provide some much needed income. However, people taking advantage of their home to earn money need to be careful they are not breaking any rules, otherwise their ‘earn from home’ scheme could end up leaving them seriously out of pocket. This makes it important to always check with your mortgage lender or landlord and your insurer before embarking on any home-based money making scheme to make sure you stay legal and have the cover you need.”
Notes to editors:
*On 21 July 2015, Bilendi conducted an online survey among 2,000 randomly selected British adults who are Maximiles UK panelists. The margin of error-which measures sampling variability-is +/- 2.2%. The results have been statistically weighted according to the most current education, age, gender and regional data to ensure samples representative of the entire adult population of United Kingdom. Discrepancies in or between totals are due to rounding.