Landlord Rent Guarantee Insurance

Rent Guarantee Insurance

If you are one of the many landlords that rely on monthly rental payments income, then you should consider insuring yourself with landlord rent guarantee insurance (RGI). One of the most significant issues for landlords is when a decent tenant falls on hard times.

The most reliable tenants can have their fair share of experiences in unfortunate circumstances which could result in rent arrears. That is when RGI steps in, and you as a landlord should consider seriously.

What is it?

Rent Guarantee Insurance helps protects landlords against the loss of rent from their tenants. In most common cases, the insurance policy is relied upon when tenants fall into arrears and cannot pay rent or do not 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.

If your tenants fall behind by one month with their rent, then you can usually make a claim and your insurance will usually then continue to pay out for a fixed number of months.

The fees of RGI can vary between 2 to 8% of the gross monthly rent.

What does it Cover?

Most policies also cover some legal expenses. For example, if you are dealing with a tenant that refuses to pay and vacate, in most cases, the legal expense to evict the tenant will be covered. However, how much a policy will cover will depend on the type of policy you have. The legend expenses would include courts fees, solicitor cost and bailiffs in the event of evection.
When looking for a new tenant, most policies cover around 50% of the rental income for up to 3 months.

You can usually protect monthly rental income by up to £2,500 for around 6-12 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

What should you consider?

When looking for the best rent guarantee insurance that is suited towards you, there some things you should look out for.

Here are some:

  • How much you can claim
  • The excess fee to pay when making a claim
  • The price
  • Any exclusions from your policy

Pitfalls – COVID 19

Most insurance companies offer 6 to 12 months of cover, 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 claims. Some policies stick to a fixed fee (such as £500) whereas other companies may ask for a cost of one month’s rent.
Following the worldwide Coronavirus pandemic, many policies added new clauses preventing claims from being paid out in the event of a claim due to COVID-19 or Corona Virus impacting on the ability for 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. Contact us to find out more.

Should I get it?

One of the critical reasons for a landlord to get rent guarantee insurance would be for your peace of mind. Knowing your 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.

Suppose you are a landlord and have previously experienced or are experiencing a tenant that has either fallen behind in rent or difficult to get a payment from. In that case, you will understand how much stress and frustration that can cause.

We hope this covers what you need to know and makes your decision easier. If you have further questions, please do get in touch.