Rent Guarantee Insurance

Written By: Timothy Simons Grimshaw on March 28, 2010 No Comment

“It feels so unjust. You own a property, you let it to someone on the promise of a fair rent, and they don’t pay up. More often than not, you will have a mortgage to pay, and the lender expects its monthly instalments. It feels like the property owner takes all the risks. Surely my insurance broker will be able to find a way to mitigate the risk of arrears with insurance.”

This is something that has become unfortunately frequent in the world of property renting; however, there are insurance policies to cover such situations. Not only will these policies mean that you will have all of your lost money replaced, but the insurance company will use the best of their ability to have the problem tenant evicted.

Since the recession hit and more and more people have been struggling to afford rent, this type of insurance has risen greatly in popularity. There are many reasons that people let themselves get into arrears with rent, they could be one half of a divorced couple struggling on their own, or a trades-person without much work, but either way the vast majority of people do not intend to get into arrears when they take on the property, however landlords do have a right to collect rent.

It is rare for a landlord not to need the rent payments to meet their own ends. The boom in “buy to let” mortgages has meant that normal everyday people have become landlords. These people need to receive the rent on their properties because they owe mortgage payments to the banks and if they get too behind on them they run the risk of having their property repossessed. So that’s why most of them are willing to pay a little extra for landlord’s insurance.

With this type of insurance there are two main policy types, there is the standard insurance against lost income from tenants going into arrears, and for a premium, the insurance company will pay the rent if the tenant does not. Some companies ask for credit checks to be carried out but not all of them will, and some will not insure you if your tenants are claiming benefits, but some will.

Secondly, the insurance company will often help you to secure an eviction if your tenant simply can’t keep up. This is very helpful, and you should make sure you have this cover with your insurances. Most landlords do not have the time or the skills to succeed in this minefield. If you are a landlord/property owner, your insurance broker will be able to advise you on the correct insurance for your property.

If you are a landlord and you are looking for some friendly advice on landlords insurance, you should visit Coversure, they are one of the UK’s best providers of insurance for anything from travel to caravan insurance.