Sometimes even the best tenants fail to pay their rent. Landlords – protect your income and mortgage by getting specialist insurance cover. Here’s what you need to know.
Rent guarantee insurance is much like any other form of insurance. For a relatively small monthly or annual fee, it will pay out money in the event of a loss – in this case, rental income loss when a tenant can’t or won’t pay.
Landlords can make a make a claim to their insurance provider when the tenant has failed to pay a fixed minimum amount of rent – usually one month’s worth. However, the majority of policies stop you from making a claim within 90 days of purchase.
Naturally, the exact level of cover and any additional extras depend on the policy you buy. Most rent guarantee insurance policies have terms and limits, so it’s important to read the small print.
Do I need rent guarantee insurance?
In a 2018 Government survey of English private landlords, the most common reason for evicting, asking a tenant to leave or not renewing a tenancy was rent arrears (58%).
Redundancy or illness can hit even the most well-intentioned of us at any time. If your tenants suddenly struggled to pay their rent, would you be able to cover your outgoings? And would you be able to afford potential legal fees necessary for recovering what you’re owed?
If the answer’s ‘no’, getting rental guarantee insurance is likely a good idea. For even the most thorough of landlords it can prove a financial lifeline when problems happen.
It can also help resolve other potentially very stressful related issues, such as:
- If your tenant deliberately damages your property.
- A dispute arises with your tenants over renovations or repair works.
- Your tenant won’t leave your property, even after an eviction notice.
How much does rent guarantee insurance cost?
Typically, a few conditions need to be met before you can buy rent guarantee insurance. For example, your tenants must have passed tenant referencing checks. If you need to make a claim it’s your responsibility to provide completed tenant referencing documents.
How much is the excess?
The insurance excess is the fixed amount you have to pay if you make a claim on your policy. An excess of one month’s rent is typical, but check with each provider when researching quotes as you may be able to lower it or get a no-excess policy.
Does it include legal protection?
Typically, landlord rent guarantee insurance is sold as a joint policy with legal assistance insurance, which means the landlord’s legal costs of recovering the rent and/or evicting a non-paying tenant are covered too. Some policies include additional 24 hour-legal support.
Is rent guarantee insurance tax-deductible?
Yes. The full cost of a policy is tax-deductible against your rental income.
To get the best deal possible, Howsy recommends comparing quotes from a range of insurance providers or calling us directly. We offer something even better.
One of Howsy’s products for landlords is called Howsy Protect, and gives you Rent Guaranteed. If a renter is late paying their rent, you’ll be paid in full, regardless. If an eviction is necessary, we’ll cover any missed rent, as well as the legal and eviction costs. If this sounds interesting, why not register and out more?