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What is rent guarantee insurance?
If your tenants are unable or refuse to pay their rent, rent guarantee insurance can help to cover your rental income. It’s also often referred to as rent protection insurance or tenant default insurance.
It can be helpful because even the most reliable tenants can fall into financial trouble, leading to arrears. It can also take several months to evict a tenant, which can result in losing considerable amounts of rent.
What is covered by rent guarantee insurance?
If you do face this problem, Discount Insurance’s rent guarantee insurance provides cover for the costs associated with:
- Loss of rent – rent arrears covered up to £2,500 per month up to a maximum of six months.
- Eviction proceedings against a tenant – to recover possession of the insured property where the tenant fails to perform their obligations set out in the tenancy agreement.
- Access to legal advice.
Policy limits and exclusions may apply, please see the policy wording for full terms and conditions.
Do I need rent guarantee insurance?
Although it’s not a legal requirement, rent guarantee insurance is worth considering. Having rent protection can help to provide peace of mind if a tenant doesn’t pay rent for your property. Without it, you may lose considerable amounts of money on lost rent and legal expenses should a situation arise with a tenant or tenants.
How much is rent guarantee insurance?
Our Rent Guarantee Insurance, which is a 12-month policy, costs £250 with no excess. This is inclusive of Insurance Premium Tax (IPT) and admin fees.
How to qualify for rent guarantee insurance
To take out a policy with Discount Insurance, your property must be residential and in the UK.
If the tenant is a student, receiving Housing Benefits or Universal Credit, or is self-employed, they will need to be fully referenced either by Discount Insurance or a referencing company approved by Discount Insurance.
However, for full time employed working tenants a 4-point check* will suffice, which requires:
- Identification from the tenant, containing a clear photograph
- Either a utility bill or bank statement
- A credit check - clear of CCJs, bankruptcies & indicating confirmation of residency
- Confirmation of employment – a written employers’ reference on company letter headed paper confirming the tenant’s permanent and current employment and that their salary is at least a multiple of 2.5 of the tenant’s rent. The documents should be no more than one month old from the start of the Tenancy.
These details have to be valid from the start of the tenancy agreement.
*If the 4 point check is applied and is in place, there will be no need to do a Full Profile Reference – though in the event of a claim, the responsibility lies with the insured to produce the appropriate documents. A 4 point check is only applicable if the Tenant(s) have not yet moved into the property before the first continuous policy is incepted.
What are the benefits of our rent guarantee cover?
You’ll receive the following benefits when you take out cover with Discount Insurance:
- You can take out a 12-month policy term with the option to pay no excess.
- Cover for the costs incurred by mediation with tenants. Up to 5 tenants can be covered as part of a single tenancy agreement.
- We consider all types of tenants.
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*Correct as at September 2024.
Rent guarantee insurance is for landlords who could fall victim to financial loss if their tenants stop paying rent for their residential property.
Landlord insurance can cover loss of rent when the property becomes uninhabitable due to an insured event. However, this doesn’t cover tenants still living in the property defaulting on rent payments. Rent guarantee insurance can help should this happen.
There are a few things rent guarantee insurance doesn’t cover. These are:
- Commercial properties such as offices aren’t covered by rent guarantee insurance, as it’s designed for residential properties.
- Your policy won’t cover prior legal costs from previous properties and tenancies.
- Your existing policy won’t cover prior claims.
- Tenants moving out means the landlord’s rent guarantee insurance cover ends. This is the case if the tenant or tenants leaves voluntarily or is evicted. You’re also not covered while you search for a new tenant.
- Contract disputes won’t be included in the cover for legal expenses.
- If you serve a notice to quit against the tenant, you won’t be covered for the claim involving that tenant.
Yes, your cover will include the new tenant at the property and policy terms and conditions still apply. However, you won’t be covered while looking for a new tenant
You will need to provide some information using the form on our website.
Here’s how the process works:
- We’ll ask a few simple questions, including the property's location and size (including the number of rooms). We’ll ask what your property type is — for example, whether it’s a house or a flat.
- We’ll also ask you about the tenants living at the property, such as their age and occupation.
- Next, we’ll perform tenant checks to ensure they align with our policy regulations.
- Finally, we’ll need to obtain satisfactory references from those tenants.