Rent guarantee insurance also referred to as tenant default insurance substitutes your tenant’s rent if they can’t pay it.
Usually after a month without rent, you can claim for a fixed amount of time – normally 12 months – until the tenant’s circumstances change, or they’re evicted.
On most policies, you can only make a claim if:
Your tenant has passed all the background and credit checks
Your tenant has fallen behind on one-month’s rent, minimum
You've filled in the proper paperwork demanding rent. You can find more information on this on GOV.UK
As soon as your tenant stops paying rent, tell your insurer.
All policies differ, but if you buy through Confused.com your rental guarantee insurance will cover:
Up to £50,000, with no monthly rental limit
Lost rent for up to 12 months
Up to £50,000 towards legal expenses.
There’s no excess on policies bought through Confused.com either.
If your tenant is falling behind on their payments, it could put you in financial difficulty.
Also, evicting tenants can take months of legal proceedings. During this time your tenant won’t be paying rent.
Having rent guarantee insurance in place means you won’t lose out on income.
There are a couple of things that rent guarantee insurance doesn't cover.
Commercial properties aren’t covered, for example properties used as offices or places of work.
If you took out cover before your tenant signed the tenancy agreement, you may not be able to claim on the policy for 90 days. This varies between providers, so check before you take out cover.
If you decide to sell instead of finding a new tenant, the insurance payments will stop.
Certain tenants might not be covered. For example, if they’re unemployed or a student. Because of the nature of their circumstances they might be more likely to miss rent payments. Make sure to get the tenant’s references and ask them for full details of a guarantor.
If the tenant leaves the property voluntarily you won’t be able to claim on the rent guarantee policy.
Contract disputes aren’t covered by the rent guarantee policy either.
As we’ve mentioned, if you buy landlord’s insurance through us, you’ll have to buy legal cover in order to get the rent guarantee policy.
Legal cover can help cover fees for other tenant-related issues. For example, if the tenant has damaged your property.
Some policies also offer access to legal helplines and portals which, along with legal advice, have templates for legal notices and tenant letters.