What is rent guarantee insurance?
Rent guarantee insurance is a type of insurance policy designed to protect landlords from financial losses incurred by tenants failing to pay their rent. A policy can cover missed rental payments and legal fees accrued due having to evict the tenant from the property.
Landlords can benefit from a rent guarantee insurance policy, as it helps to provide financial security and peace of mind in case of unpaid rent. However, it is essential to read the policy’s terms and conditions carefully to understand what is covered and any exclusions.
Who can use rent guarantee insurance?
Rent guarantee insurance is typically used by landlords as a form of financial protection against unpaid rent. This type of insurance can be purchased by landlords who rent out residential properties.
The policyholder can make a claim against the insurance in the event that their tenant fails to pay rent. A rent guarantee insurance policy may also cover landlord legal expenses associated with evicting a non-paying tenant.
It is important to note that policies and coverage can vary between providers, so landlords should carefully review the terms and conditions of each policy before purchasing rent guarantee insurance.
Do I need rent guarantee insurance?
Whether or not you need rent guarantee insurance depends on your specific circumstances and level of risk tolerance.
If you rely on rental income to cover mortgage payments or other expenses, rent guarantee insurance can help to provide peace of mind and financial protection in the event of tenant rent arrears.
What are the benefits of landlord rent guarantee insurance?
The benefits of rent guarantee insurance offer financial protection and peace of mind for landlords. Some specific advantages of this type of insurance may include:
- Rental income protection: Rent guarantee insurance can cover lost rental income in the event that a tenant defaults on their rent payments.
- Legal coverage: This insurance may also provide legal coverage and assistance for eviction proceedings.
- Tenant screening: This insurance requires landlords to perform tenant referencing checks, which can help them to find more responsible renters.
Overall, rent guarantee insurance can help landlords mitigate the financial risks associated with renting out their properties.
Is rent guarantee insurance the same as loss of rent cover?
Rent guarantee insurance and loss of rent cover can appear similar, but they are not the same thing. Rent guarantee insurance is designed to protect landlords against the financial risk of tenants failing to pay rent, while loss of rent cover is typically a component of a landlord insurance policy and provides coverage for lost rental income when the property becomes uninhabitable due to events such as fire or flooding.
Loss of rent cover may be included in a broader landlord insurance policy, while our Rent Guarantee Insurance is a separate product that can be purchased as a standalone policy or alongside our Landlord Insurance.
Do I need to reference check my tenant before taking out cover?
Yes, it is important to reference check your tenant before taking out rent protection insurance. Most insurance providers, including Just Landlords, require landlords to verify that their tenants meet certain criteria, such as having a good credit history or steady income, in order to qualify for coverage.
In addition to satisfying insurance requirements, conducting thorough tenant screening can also help landlords select responsible tenants who are more likely to pay rent on time and care for the property. This can reduce the risk of having to make a claim on the insurance policy.
What information is needed as part of a tenant reference check?
Tenant reference checks typically require several types of information to be collected from the prospective tenant, such as:
- Proof of identification: This includes copies of two forms of identification, one of which must contain a photograph where the tenant is an individual.
- Confirmation of employment and income: This includes current employment details and income amount.
- Rental history: This includes the tenant’s previous rental address and landlord contact information.
- Credit history: This involves obtaining a credit report to assess the tenant’s creditworthiness, including their credit score and any past financial issues.
- Background check: This can include a criminal history check, as well as checking for any other red flags, such as bankruptcy or eviction history.
The information collected during a tenant reference check helps landlords assess the tenant’s reliability and ability to pay rent on time, reducing the risk of future issues.
Does my tenant need a guarantor for rent guarantee insurance?
Whether or not a tenant needs a guarantor for rent guarantee insurance can depend on whether they pass the tenant reference checks. If they don’t, landlords may have to obtain a deed of guarantee to confirm that there is a guarantor assigned to the tenancy agreement.
If a guarantor is required, they will typically need to meet certain criteria, such as having a good credit history and sufficient income to cover the rent in the event that the tenant defaults. The guarantor will also need to sign a legal agreement stating that they will assume financial responsibility if the tenant fails to pay rent or causes damage to the property.
It is important to carefully review the terms and conditions of each policy and seek advice from the insurance provider if unsure about the requirements.
How much does rent guarantee insurance cost?
The cost of rent guarantee insurance can vary, depending on the level of excess you are willing to pay. For example, with our cover, the following price options are available:
- £225 for a policy with no excess
- £200 for a policy with 1 month’s excess
- £175 for a policy with 2 months’ excess
Each month’s excess will be the amount you charge for one month’s rent.
Can I buy rent guarantee insurance as a standalone policy?
Yes, rent guarantee insurance can be purchased as a standalone policy. This means that it is not included as part of a broader property insurance policy, although it can be added as an optional extra.
Do I need landlord insurance to take out rent guarantee insurance?
While it is not necessary to have landlord insurance in order to take out rent guarantee insurance, it can be beneficial to have a suitable level of property insurance as well as rent guarantee coverage.
Landlord insurance typically provides coverage for a range of risks, such as property damage, liability claims, and loss of rental income if the property becomes uninhabitable due to events such as fire or flood damage.
It is important to carefully review the terms and conditions of each insurance policy and seek clarification from the insurance provider if you’re unsure about the requirements.
Can I take out multiple rent guarantee insurance policies?
Yes, in the situation that you have multiple tenancy agreements in one property, you may want to take out multiple rent guarantee insurance policies. One rent guarantee insurance policy is designed to cover one tenancy at one property.
Also, if you have multiple rental properties, you may want to cover each tenancy in all of them. You can take out policies for as many tenancies in as many properties as you need with Just Landlords.
Can I cover multiple tenants on one rent guarantee policy?
This cover is for the tenancy agreement you have in place, so as long as the tenants are part of the same agreement, they can be included on one rent guarantee policy. If you have multiple tenancy agreements, as may be the case with a house in multiple occupation (HMO), you will need a separate policy for each of them.
What type of tenancy agreement do I need?
For a rent guarantee policy with Just Landlords, it has to be an assured shorthold tenancy agreement or the equivalent for Scotland and Northern Ireland.
For how many months will my rental payments be covered under your policy?
Our annual policy will cover missed payments of up to £2,500 over a 12 month period whilst the eviction process is taking place to grant vacant possession of the property.
What happens if my tenant’s references are not satisfactory?
For cover to be effective, all references taken must be satisfactory. If the tenant’s references are not satisfactory there will need to be a guarantor whose references are satisfactory.
When can I make a claim?
The policy will provide full details of the cover for each section covered. But in general, the rent must be in arrears by only one calendar month for you to be able to initiate a claim.
Does a deposit need to be taken from the tenant?
Yes, this policy does not cover claims if the insured person or their letting agent has allowed the tenant into possession of the insured property prior to the first month’s rent and the deposit having been received in cash or cleared funds. Please see the policy wording for full terms and conditions.
If the tenant defaults on their rent and I make a claim, do I have to wait for tenant eviction before I am paid any money?
No, we appreciate that rent should be paid to you each month, especially as you may have your own financial needs to meet. Therefore, during the claim process, we will pay you your rent arrears on a monthly basis in line with your tenancy agreement.
How many properties can I cover on my policy?
The cover provided is specific to the property where the tenancy agreement is in force. If you wish to cover more than one property then a policy must be issued for each property separately.
How quickly can I get covered?
Cover is provided instantly, simply complete the online application and cover is provided from the moment your payment is processed. The online application process can take no longer than a few minutes. You will then be sent your full policy documents to your email address.
Can you insure the buildings and contents of my property?
Yes, we provide a comprehensive landlord insurance policy that includes 40 covers as standard. This includes a range protection for both buildings and contents. You can read more about this product on our Landlord Insurance page or you can click here to get a quote.
What if I have more than one tenancy agreement at the property?
The policy is designed to cover one tenancy at one property. If you have multiple tenancy agreements at the property you will need a separate policy for each tenancy agreement. For example, if you have two separate tenants and two tenancy agreements you will need two separate policies.