Rent guarantee insurance is a risk management product that protects landlords against losses if a tenant fails to pay rent. Rent guarantee insurance can be expensive, costing between 5% and 7% of the annual rent payments linked to a policy. Normally, the landlord will have to pay for the rent guarantee. However, in some cases, the landlord may pass on the cost of rent guarantee insurance to the tenant.
This may come into play when a tenant with bad credit applies for it. When a tenant is unable or unwilling to pay rent, you run the risk of not being able to pay your expenses, potentially damaging your credit or even losing your property to foreclosure. Rent guarantee insurance can keep you and your real estate investment safe from interruption of income due to non-payment of rent. Get peace of mind with rent guarantees designed to keep you current on your rent if you involuntarily lose your job.
We pay rent directly to your landlord so you can stay in your home and focus on getting back on your feet. Note that landlords often have to apply for rent guarantee insurance under the lease, and that could be a cumbersome prospect. In these cases, the landlord would collect, even if the property is vacant or the tenant does not pay rent. Some landlords may choose not to shell out additional money for rent guarantee insurance, confident that the background and credit checks they conducted on tenants before leasing them their property and handing them the keys demonstrate that they are financially able to meet the monthly rent payments.
In addition, not all applications for rent guarantee insurance are accepted, as each insurer does their due diligence. The policy provides legal cover to help you with eviction and pays unpaid rent until you have vacant possession of the property (up to specified limits). Note that this is different from landlord's insurance, which covers damage to the property but not loss of rent. Landlord's insurance, or property rental insurance, covers damage to a property and also includes liability coverage in case a tenant or visitor is injured on the premises.
Pensio's affordable and innovative Rent Co-Guarantee is backed by an insured Rental Income Performance Bond that ensures rent will be paid each month if you lose your job. If your landlord's insurance pays out in the event of a claim for loss or damage caused by, for example, fire or flood, which means that your tenants can no longer stay in the property, then any loss of rental income is usually covered by the loss of rent cover included in the master policy. Rent guarantee insurance policies are written on specific leases and not on specific properties; this means that you will have to write a specific policy for each tenant you take out on one of your tenancies. Job losses, medical emergencies and other circumstances can lead to non-payment of rent even if the tenant is reliable.
This type of insurance was invented because landlords with non-paying tenants were defaulting on their mortgage and other important payments (due to non-payment of rent). Even if you have carried out strict checks and credit checks on all your tenants before handing over the keys, having rent guarantee insurance can be worthwhile.