Rent Guarantee

What is Rent guarantee?

Rent guarantee insurance is a form of underwriting through which landlords can be protected against loss of rent if the lessee defaults. Globally, most firms offer this protection through regulated insurance companies, to ensure that the provider can make good on promises of payment. Normally, 'Landlord Rent Guarantee Insurance' is combined with 'Legal Assistance Insurance' whereby a landlord's legal costs of recovering rent and/or evicting a non-paying tenant are covered.

Do you need it?

Rent guarantee insurance covers your monthly rental income if your tenants do not pay. You can usually make a claim on your policy once your tenants have fallen one month behind with their rent. Your insurance will then continue to pay out for a fixed period, normally between 6-12 months.

You are not legally required to have rent guarantee insurance, but it could offer valuable protection if your tenant falls behind with their rent or you need legal help.

What does it cover?

You can protect your monthly rental income up to £2,500 for a maximum of 12 months if:

Your tenant defaults on their rent
Your tenant deliberately causes damage to your property
Your tenant refuses to leave your property following an eviction notice
You are involved in a dispute with tenants over repairs or renovations to your property.

How do you claim?

Try speaking with your tenants and ask for the rent they owe before you claim on your policy. If this is unsuccessful, you must give the following eviction notices before you can claim:

Section 21 notice ending the tenancy agreement.
Section 8 notice seeking possession of your property if your tenants will not leave.

Your insurer may only ask you to serve one eviction notice, either Section 21 or Section 8, before they will pay your claim, so check your documents for details.