An easy introduction to landlord rent insurance
Whether you are a very trusting landlord, or someone who assumes all tenants are aiming to cheat you out of all your money – it might be a good idea for you to invest in landlord rent insurance (otherwise known as rent guarantee insurance).
Before we get started this is different from loss of rent insurance. This covers rent that is lost when your property becomes uninhabitable and your tenants need to move out as a result. This should usually be covered as part of your buildings insurance.
What is landlord rent insurance?
In the worst case scenario, you have a tenant who can’t or won’t pay rent, and then you realise that your landlord insurance won’t cover this. In most cases landlord insurance will cover buildings and contents, legal cover, emergency assistance and liability cover – but not rent arrears.
This is where rent insurance comes in. Quite simply, it’s there to protect landlords against loss of rent. Whether this is because tenants are unable, or refuse to pay rent, the insurance company will cover the loss of income – or at the very least, some of it.
Most policies should also cover legal expenses. For example, if you have a tenant that’s fallen into rent arrears and isn’t moving out of the property, this will usually end up in court.
How much your insurance will cover obviously relies on what type of policy you get. At the very least, you should expect the following:
- Rental payment cover
- 50% of the rent paid for up to 3 months after vacant possession has been obtained, whilst you find a new tenant
- Legal cover for eviction costs
Do you need landlord rent insurance?
This is purely for your own peace of mind, there is no legal requirement to get landlord rent insurance, but it does seem a sensible idea. If you’re not quite convinced you might want to consider:
- The thing with most tenants is that you won’t really know how good a tenant they’re going to be for possibly up to a year, maybe longer. Though referencing should give you a good idea of the kind of tenant you’re going to get, realistically it might not protect you against everything – insurance will.
- If you rely on rent to cover your monthly expenses (mortgage and bills), then you would be mad to not have insurance. A few months in arrears and legal action could mean you’ll be seriously out of pocket.
- Fairly, or unfairly DSS tenants are seen as high risk compared to others. According to statistics they are more likely to fall into arrears, which means if you are a landlord that accepts DSS tenants you should seriously be considering landlord rent insurance.
If you’re looking to find new tenants for your rental property, easyProperty can help you with our fixed-fee packs starting from as little as £99. That means we won’t charge you a percentage of your rental income – just a simple, low, upfront fee. Click here to find out more.