Renting > Rental Guarantee Insurance

It’s easy to paint all landlords with the same brush, especially when you’re a tenant. ‘Greedy’, ‘exploitative’ and ‘lazy’ are all words that are commonly used to describe landlords, with there rarely being any positive comments regarding those who own property and rent it out to tenants.

It may be that these descriptions are truthful in certain cases, but it would also be unfair to depict all landlords as bad people with no moral compass. Similarly, we can’t say that all tenants are innocent renters who are exploited and abused.

We’ve all seen ‘tenants from hell’ on television, and most landlords will have a story to tell about tenants that have wrecked their houses or refused to pay rent. As the old saying goes, it takes two to tango, and when it comes down to tenancy disputes, it’s worth remembering that there is more than one party involved and more than one story.

Love them or loathe them, landlords are taking a risk when they choose to rent out their property. Yes, they are more than likely making a fair amount of cash from the agreement, but they are also putting their trust in their tenants to keep their property in a good state of repair and pay their rent on time in order for their landlord to get by.

As the rental market in the UK continues to grow and the economic forecasts become increasingly uncertain due political circumstances such as Brexit, it could be argued that it’s riskier than ever before to be a landlord. Unsurprisingly, then, the demand for insurance policies that protect landlords from tenant discrepancies is growing, and rental guarantee insurance is one way of achieving this.

What is Rental Guarantee Insurance? 

So, what is rental guarantee insurance? Otherwise known as rental protection insurance, this insurance is designed to offer a lifeline to landlords should a tenant default on their rental payments.


Why choose Rental Guarantee Insurance? 

A tenant not paying rent can happen for several reasons, and it can happen to the most scrupulous of landlords, even if they use a letting agent to perform rigorous references and background checks before agreeing to the rental agreement. As mentioned, the current economic climate only increases the potential for tenants to default on the rental payments, and this can lead to landlords being left in the lurch.

Despite what tenants may think, landlords are often relying on rental payments to make ends meet, so if one of those payments is missed, it may have a severe knock-on effect. 


What does Rental Guarantee Insurance cover?

If you are a landlord without the financial capacity to cover your outgoings should your tenants fall behind on their rent or simply refuse to pay, then rental guarantee insurance should be high on your list of priorities.

The insurance covers the rent owed should a tenant default on their payments. While this offers a level of security to landlords, there does tend to be a limit on the amount you can claim, so it’s important you read the small print of your agreement before you sign on the dotted line.

Rental guarantee insurance can be bought to cover both six month and 12-month tenancy agreements. While it might seem like an additional and expensive add-on, the cost of the insurance is tax-deductible against your rental income and the security that it provides should something go wrong is worth the initial outlay.

Making a claim

This type of cover will usually pay up to a certain amount per claim. For example, you may be able to claim for up to £3,000 per month up to a maximum figure of £18,000, or until the tenant is evicted. The claim cannot be submitted until the tenant is at least one month in arrears, meaning that you will have to go a full month without any form of compensation, so it is worth having a rainy day fund should something go wrong.

While a claim can be made once a tenant is one month in arrears, this cannot be submitted as soon as the policy has been opened. You will normally have to be at least 90 days into your rental guarantee agreement before you can submit a claim. In light of this, it’s best to get your insurance policy set up sooner rather than later to give you the best protection available during the tenancy agreement.

While the insurance policy will cover you should your tenant’s default on their payments, you need to read the small print of the policy and check the excess involved. Excess refers to the amount you pay towards the claim and an excess of one month’s rent is not uncommon when it comes to rental guarantee agreements.


Requirements for Rental Guarantee Insurance

You also need to make sure that the policy covers the tenants that you currently have living in the property. Some policies exclude asylum seekers, so check in with your policy provider and find out whether they will offer cover for the tenants currently occupying your property or any potential tenants that are interested.

Tenant References

It’s standard procedure to run tenant references on prospective tenants before allowing them to occupy your property, and most insurance providers require that this is done before they offer a policy. The provider will want to see evidence of the reference checks and will also require that a financial guarantor is in place when needed. Appropriate references include written references from previous letting agents and landlords, or an employer and credit check. It may feel like an unnecessary bit of admin, but it’s imperative that you comply with all the required reference demands, as the insurance provider may refuse to pay out if you have failed to provide an adequate reference before making a claim. Not only will this leave you with no financial support, but it will also mean that you have wasted money on an insurance policy that you cannot take advantage of.

On top of asking to see evidence of references and background checks, your insurance provider may also require that the tenancy is a certain type of agreement and may ask to see evidence of the tenancy deposits being stored in a government-approved tenancy deposit scheme.  Before you get in contact with a provider, ensure that you have these documents readily available, in order to speed up the application process.


What about Legal Expenses?

Trying to collect rental arrears from tenants can be messy and expensive, with the situation sometimes leading to a legal dispute. Tenants and landlords can end up involved in a legal dispute for a variety of reasons, whether it’s rent payments, evictions, or damage to the property. Due to the frequency of these disputes, legal expenses insurance is available to landlords to help ease the financial burden of legal proceedings.

Legal expenses cover is sometimes included in rent guarantee insurance, but you may need to buy it as a separate policy. While it may be a welcome addition to your insurance armoury, there will be limits to the amount you can claim on the policy, and you may be required to employ a solicitor from the insurer’s chosen panel of firms rather than going with a company that you know and trust. 


Other Insurance options

Rent guarantee insurance offers financial protection to landlords, but there is a lot more that can go wrong with property than tenants being unable or refusing to pay their rent. If you are a landlord looking to give yourself the best protection possible, you might want to consider some of the other insurance options that are available to landlords:

Buildings insurance

Buildings insurance will protect the brick and mortar of your property from damage by the likes of floods, storms and fires. It’s usually a requirement from most mortgage lenders, so unless you own the property outright, you will be required to have this type of insurance before you can rent the property to tenants.

Contents insurance

This type of cover is particularly important if you are renting your property on a furnished or part-furnished basis. The cover will protect the contents and belongings in the property, such as beds, sofas and chairs from damage or theft.  

Liability insurance

Liability insurance is an added extra that is particularly popular with landlords who are renting out student accommodation or social housing. The policy will cover you should a tenant try and sue for you an accident that occurs on your property. This type of insurance may also be useful to landlords who own older properties that may have more potential hazards than new builds.

Legal expenses insurance

As mentioned previously, legal expenses insurances will cover the legal costs should you end up in a legal dispute with your tenants. The cover can also cover the cost of defending you against a criminal conviction.


Rent guarantee insurance isn’t a legal requirement for landlords, with some choosing to put their faith in their tenants, rather than forking out for additional cover that could end up costing them thousands of pounds without ever being required. The price of an insurance policy can differ depending on the type of property, the tenants living at the property and the rental income involved. It’s important that you do your research before committing to a certain policy, as it may not be the best one for you and you could end up wasting your money.

It’s easy to say that landlords are money-grabbing business people who do not care for the property advertised or the tenants that live in it. However, this attitude ignores a large section of the landlord community that are good, hard-working people. Like everyone else, landlords tend to be people who are trying to make a living and get-by, with rental payments often being the primary source of income that keeps them afloat and puts food on the table. If you are a landlord, and your tenant misses their payments, the consequences can be huge, much like it would be if you didn’t receive your salary from your employer. In light of this, it’s advised that you purchase rent guarantee insurance and protect yourself from this situation.

As with any purchase of this nature, do not rush into a decision. Small print, terms and conditions and the fine details are often overlooked by consumers who feel pressured into buying. But, when it comes down to insurance, the devil really is in the detail.

Compare providers, fine-tooth comb the details and make sure that you understand what you are purchasing and whether it works for you. If you are ever unsure, seek the help of a professional and don’t be afraid to take some time to consider your options or walk away from a deal if it doesn’t feel right. The last thing you want to happen is for you to shell out on an expensive policy, only to later find out it doesn’t offer you the cover required. 

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