Home Insurance Renewal (Public/Personal Liability now excludes Tenants)

Hello, I am seeking advise.

My home insurance is due to renewal and I rang my home insurance provider and among several questions asked whether the public/personal liability applies to single room let to tenant (I am owner occupier). They said the insurance includes public/personal liability to tenants as long as there is a single tenant per room.

Since the phone call (this morning), they have emailed me an updated policy which includes special condition (which I didn't have in neither my proposed renewal policy, nor the old policy) that states:

"Owner occupied building with single room let to tenant: exclusion under event insured Public and Personal liabilities and the contents definitions, does not include a single tenant occupying a room in your home. However, we will provide cover for loss or damage (excluding accidental damage, if this applies) to a single tenant's personal belonging's up to xyz."

1. Could you advise whether the insurance provider can legally include a new special condition (out of blue) to my existing policy upon renewal and on what basis?

2. In addition, are you aware of home insurance providers who would include tenants into public and personal liabilities within the policy under rent a room scheme (landlord live-in)?

Many thanks.