Do I need rent guarantee insurance?
How much would it affect your income if your tenant was unable to pay the rent? If you need the certainly of having your rent paid, you should consider rent guarantee insurance. Here we explain what it is and how it works.
What is rent guarantee insurance?
Rent guarantee insurance ensures you don’t lose income if a tenant is unable to pay the rent. It isn’t a legal requirement, however, we strongly recommend landlords take out a policy to make sure their income is protected.
Rent guarantee insurance is different to landlord buildings insurance, which will only pay out if you are unable to rent your property due to damage such a fire or flood.
How does it work?
You should claim against the rent guarantee insurance as soon as a tenant misses a rental payment. Whilst it’s important to get the claim notified, the tenant must be in arrears for two calendar months before the insurance will pay out. Watch the video below to find out more about when to trigger your rent guarantee insurance.
What is included in the policy?
- Cover for up to £25,000, £50,000 or £75,000 rental income
- Up to 12 months’ cover
- Landlord legal expenses up to £100,000
- Landlord legal expense helpline 24/7
- All tenant types considered (assured shorthold tenancy (AST), excluded tenancy (lodging), assured tenancy, company let etc.)
- Cover for up to 25 tenants in a student let/HMO (House of Multiple Occupation)
A rent guarantee insurance policy can be easily added on to an existing landlord insurance policy. The cover is tax deductible and legal expenses are included as standard. This means your rent will be protected if your tenant defaults, and the legal costs you may face for evicting a tenant, will be covered. Our policy also includes access to a legal helpline with an accredited solicitor just a phone call away for advice and support should a rental dispute arise.
What’s not included in the policy?
- For the insurance to be valid your tenant(s) must have passed referencing or have a guarantor who has passed referencing. Find out more about tenant referencing here.
- The policy won’t count if you take it out after a tenant has defaulted on their rent
- If you take out the policy after the tenancy has started, there will be a 90-day exclusion period before a claim can be submitted
How do you claim?
Try speaking with your tenants and see if you can get the rent they owe before you claim on your policy. If this doesn’t work and they can’t/don’t pay, you must issue the following eviction notices before you can claim:
- A Section 8 notice: also known as a notice to quit or possession notice. A Section 8 notice seeks possession of your property if the tenant won’t leave
- Ultimately, if your tenant(s) can’t pay, you can issue a Section 21 notice which ends the tenancy.
For more information about how to evict tenants, click here
Give us a call today, or click here to find out more and purchase rent guarantee insurance for your properties.