Even the most trustworthy tenant could fall victim to financial difficulties and may stop paying rent. If you would struggle to pay your own bills without this income, it’s worth considering rent guarantee insurance, which is tax deductible if you claim the cost as a business expense. Here’s our checklist to help you find the right insurance for you.
Things to consider when choosing rent guarantee insurance
Shop around to find insurance that suits your needs. You can learn more about insurance by talking to a broker or your agent, checking on comparison sites and also via companies that only deal directly with you.
Check whether you can secure standalone rent guarantee insurance or if it’s offered as part of an ‘add-on’ to standard landlord policies.
Compare like with like cover by checking:
If rent guarantee covers you for all rent lost, e.g. from the same day tenants stop paying, or if you have to wait a month or more for insurance payments to activate?
How often and how much each claim can be. For example, is there a limit on the number of claims you can make and for each amount you can claim?
If there are any terms and conditions. For example, if you need to serve your tenant with an eviction notice to be able to claim.
The excess you need to pay and how this affects your monthly/annual payments.
After obtaining rent guarantee insurance, is there a time limit before you can make a claim?
Does the insurance cover lost rent if repairs are required after the tenant moves out?
Does the insurance cover properties abroad?
Does the insurance cover both residential and commercial properties? Make sure to check this if you have a mixed portfolio of properties.
To secure rent guarantee insurance, the insurer may ask for:
Information regarding the contract you have in place with your tenants.
Tenant referencing, e.g. written references from previous agents, landlords and an employer, plus a credit history check (including the Enforcement of Judgements Office, County Court Judgements and bankruptcy). Some insurers may ask that these checks are undertaken by a licenced referencing service before the tenancy has begun.
