Even tenants who seem totally reliable on paper can become unable to pay the rent. When this happens, Rent Guarantee Insurance becomes incredibly important.
A small change in circumstances, often outside of the tenant’s control, can be enough stop them paying the rent. Without Rent Guarantee Insurance, your income and mortgage are at risk.
What is Rent Guarantee Insurance (RGI)?
RGI is an insurance policy that protects you from the risk of tenants not paying rent. It is sometimes called Legal Expenses & Rent Guarantee Insurance (LERG).
With RGI, you can claim your monthly rental income even if your tenants can no longer pay it. You simply make a claim, and if it meets the terms of the policy, the insurer pays your rental income.
Sometimes RGI is sold as a joint policy with legal expenses insurance, covering you against any legal costs occurring as a result of tenant disputes or evictions.
Other landlord insurance, such as building and contents insurance policies, may have clauses about covering losses of rental income. These will usually only apply if the property is made uninhabitable due to one of the insured perils (e.g. flood, storm).
So although you may think you are already covered, you are unlikely to be protected from a tenant’s change in circumstances without a specific RGI policy.
Why should landlords get Rent Guarantee Insurance?
A recent landlord survey by HomeLet revealed that non-payment of rent was an issue for 67% of landlords who have experienced problems with a tenancy.
It’s not just about money, either. Having RGI removes pressure from your tenant-landlord relationship.
If your tenant misses a payment, you won’t feel rushed to evict and replace them in order to minimise your losses. Your income is guaranteed by the policy, giving you extra time to accommodate the tenant’s needs and situation without you being out of pocket.
You can then take time to decide and agree on the best course of action. On short, it lets you be a better landlord.
Many RGI policies can also help with the cost of eviction.
How Can You Buy Rent Guarantee Insurance and Who Is eligible?
Any landlord with an occupied property can purchase Rent Guarantee Insurance. There usually a few conditions to be met, however.
Firstly, it is often a requirement that there is a tenancy agreement in place.
Secondly, the tenants must have passed tenant referencing. If a tenant fails referencing, then RGI may still be available if they can provide a guarantor. In the event of a claim, it is the landlord’s responsibility to present completed referencing documents.
Rent Guarantee Insurance policies are available for different lengths of cover, including 6 and 12 month’s cover, with no excess options available and can be ordered online quickly and easily.
Get Rent Guarantee Insurance now from just £55
Priya Gill works at our insurance partners, Rentguard. OpenRent partner with Rentguard to provide an unbeatable Rent Guarantee Insurance offer to landlords across the UK!