If you are one of the many landlords that rely on monthly rental payments for your income, then you should consider landlord rent guarantee insurance. One of the most stressful issues for a landlord is when a tenant falls on hard times and can no longer afford rent payments.
Even the most reliable tenant can have unfortunate circumstances, which can result in rent arrears. That is when insurance steps in, and you, as a landlord, should seriously consider the investment of protecting your income.
What is it?
Rent Guarantee Insurance helps protects landlords against the loss of rent from their tenants. Commonly, the insurance policy is relied upon when tenants fall into arrears and cannot pay their rent. If this is the case, as a landlord, you can reclaim the money through the insurance company, or a portion of it at least.
If your tenants fall behind by one month with their rent, you can usually make a claim, and your insurance will usually then continue to pay out for a fixed number of months or until you gain possession of your property.
Generally, a policy will include legal fees, court fees and bailiff costs if legal action is required to gain possession.
What does it Cover?
How much a policy will cover will depend on the type of policy you have.
Generally, a policy can usually protect monthly rental income by up to £2,500 for around 6 to12 months if:
- The tenant refuses to leave the property after an eviction notice
- The tenant causes damage to the property deliberately
- The tenant refuses to pay their rent
What is not included?
In some cases, your insurer may reject claims if you do not communicate with them within the appropriate time frame and update them of any changes in your circumstances. A few other things that are usually not included are:
- Claims within the first 30 days of setting up your policy
- Claims for tenants who have a history of not paying rent or where due diligence was not carried out pre-tenancy
What should you consider?
When looking for rent guarantee insurance that is best suited, there some things you should look out for.
Here are some:
- How much you can claim in a 12-month period
- The excess fee when making a claim
- The price of a 12-month policy
- Any exclusions from your policy
- Whether the policy is available to you based on the specific type of tenant and how they have been referenced before the occupation of your property
Pitfalls – COVID 19
Most insurance companies offer 6 to 12 months of insurance, generally to cover the length of the tenancy agreement. Unfortunately, due to COVID-19, the price for getting rent guarantee insurance and premium is increasing.
In most cases, there will be an excess amount that you must pay towards any claim.
Following the Coronavirus pandemic, many policies added exclusions, thus preventing claims from being paid out due to COVID-19 or Corona Virus impacting the ability of the tenants to pay their rent.
There are a few policies that will still payout despite redundancies, layoffs, furloughed staff, or reduced salaries impacting on tenants.
Should I get it?
One of the critical reasons for a landlord to invest in rent guarantee insurance would be peace of mind. Knowing rent is guaranteed to be paid and having a sense of security gives landlords the time to manage and focus more of their time on other aspects of their life.
As a landlord, and have previously experienced a tenant that has fallen behind in rent, you will understand the stresses and frustration this causes.
We have access to a market-leading Rent Guarantee product for our managed landlords only. Presently priced at £299 (plus a small incidental cost of referencing, if required) for 12-months cover; a small price to pay for security and peace of mind. For more details on this product, please complete the form below, and one of our team will discuss the policy with you.