HMO insurance covers a house let to people who are not one household, and the reason it exists as a separate product is that the building is used differently rather than that it is built differently. More cooking, more electrical load, more doors, shared escape routes and a licensing regime that sets standards for all of it. An insurer asking whether the property is an HMO is asking a question that changes the price, the conditions and sometimes whether they will quote at all.
The definition, in the terms an insurer uses
Broadly, three or more people forming more than one household who share a kitchen, bathroom or toilet. Larger properties need a mandatory licence and many local authorities operate additional or selective licensing covering smaller ones. Insurers ask because the regime brings room size, amenity and fire safety standards with it, and a licensed compliant property is a measurably better risk than an unlicensed one.
What the policy has to carry
Buildings cover on a proper rebuild figure. Landlord contents, which on an HMO is substantial because the rooms are furnished. Property owners liability at a limit that reflects the number of people coming and going. Loss of rent sized against the total room income rather than a single tenancy. Accidental and malicious damage options, which on a shared house are closer to necessary than optional.
Fire is the defining exposure
Shared kitchens, separate cooking arrangements and escape routes used by strangers make fire the risk that dominates the underwriting. Interlinked alarms, fire doors, emergency lighting where appropriate and a current fire risk assessment are duties under the HMO regime and are exactly what the insurer will ask about. A property that meets its licence conditions is usually straightforward to place.
What happens if the property is unlicensed
A property that requires a licence and does not hold one is committing an offence, is exposed to a rent repayment order, and is very hard to insure on normal terms. Insurers ask the question directly, and answering it wrongly is a misrepresentation that can defeat a claim. Where a licence application is pending, say so rather than leaving it out.
Questions people ask about hmo insurance
What counts as an HMO?
Broadly three or more people from more than one household sharing a kitchen, bathroom or toilet. Larger HMOs need a mandatory licence, and many councils license smaller ones too.
Can I insure an HMO on a normal landlord policy?
Not safely. The occupancy on the schedule would not match the building, and misdescription is dealt with at claim time. Tell the insurer it is an HMO and buy the right product.
Does the insurer need to see the licence?
It will ask whether one is required and whether you hold it, and it may ask to see it. Pending applications should be disclosed as pending.
Is HMO insurance much more expensive?
More than a single family let, and how much more depends heavily on the tenant type, the fire precautions and the area. A compliant licensed HMO with good fire safety prices far better than one without.