Managing a rental property isn't always predictable, especially when it comes to rent payments. Whether you're new to letting or an experienced landlord, missed or delayed payments can have a serious impact on your daily finances. That's why many landlords are exploring options like rent guarantee insurance.

As part of your overall landlord insurance strategy, rent-related cover is becoming an important consideration. In this blog, we will explore what rent protection insurance is, how much it costs, what is and isn't covered, and what other types of landlord insurance you should consider.

What is landlord rent guarantee insurance?

Rent guarantee insurance, also known as rent protection insurance or rent insurance, is a level of landlord insurance that covers lost rental income if a tenant fails to pay their rent. It provides a safety net that guarantees that you still receive regular payments if your tenant can't.

While standard landlord insurance may protect the building and offer liability cover, it normally doesn't cover unpaid rent. This is where rent guarantee insurance is useful. Depending on the policy, rent protection insurance can also include legal expenses cover, which helps with the costs of recovering rent or evicting a tenant if necessary.

It can be a great way to protect your income, especially if you rely on rent to cover mortgage payments.

What does rent guarantee insurance cover?

While each rent insurance policy differs slightly, all forms offer financial cover. Below, we've broken down the typical solutions and exclusions, so you know what to expect from your policy.

What's covered
- Unpaid rent: The main benefit of landlord rent insurance is the reimbursement of missed rent payments if your tenant doesn't pay. Policies typically cover a set monthly amount for a fixed period (e.g. up to 6 or 12 months).
- Legal expenses: Many rent guarantee insurance policies also include cover for legal costs associated with recovering arrears or pursuing eviction, helping you handle disputes without the financial burden.
- Eviction support: If legal proceedings are necessary, some policies include expert legal advice and support for court processes.
- Continued rent cover during eviction proceedings: Depending on your provider, you may continue to receive rent payments during the eviction process, up to the limits of your policy.

It's worth noting that most rent protection insurance policies are only valid if your tenants pass certain referencing checks, so be sure to follow your provider's guidelines.

What's not covered
- Commercial properties.
- When the tenant leaves willingly or is evicted.
- Rent lost during void periods between tenancies.
- Rent not covered due to policy limits being exceeded.
- Breaches of contract or negligence on the landlord's part.
- Delays in notifying your insurer about arrears or legal action.
- Claims made outside of the policy's active period or waiting period.
- Missed rent if the tenant hasn't passed the required referencing checks.
- Intentional or malicious damage by tenants (unless specifically included).

How much does rent insurance cost?

Rent guarantee insurance is normally bought as an add-on to a landlord insurance policy at an additional cost, and this cost depends on different factors, including:

- Your level of cover.
- Your monthly rental income.
- How much excess you would like to pay.
- Whether legal expense cover is in your policy.
- The type of property you're renting out, including its size and where it's located.

The cost of excess (the amount you pay towards a claim) is up to you. But it's a general rule that the higher the excess, the lower your premium will be, and vice versa. Many providers offer rent guarantee insurance with no excess at all, but it may be more expensive.

What to check before buying rent protection insurance

Before purchasing rent insurance, you should meet all legal requirements for renting out a property, as well as having all the correct documents up to date. You should be able to provide the following:

- Affordability: Your tenant should have a minimum income of two and a half times the monthly rent (or three times if they're self-employed). This income can come from wages, benefits, pensions, or a mixture of both. It's important to verify this by requesting supporting documents, e.g. bank statements.
- A credit check: Tenants must have a credit-free history from CCJs, bankruptcies, or IVAs for a minimum of three years.
- Proof of identification: Two forms of identification are normally required, with at least one containing a photo. A passport or a driver's license paired with a utility bill is recommended.
- A legal tenancy agreement: This must be in place when making a rent insurance claim; without it, the policy will be invalid.

The rent protection insurance policy also instructs that all documents you are legally required to provide to the tenant have been issued. These include:

- EPC
- How to rent guide
- Gas safety certificate
- Deposit prescribed information

It's important to carefully review the policy details. Make sure you understand what your rent guarantee insurance covers and any exclusions that might apply. Check the claim limits, waiting periods, and the ease of making a claim to avoid any delays. Compare premiums and excess fees to find the best value, and verify the insurer. It can also be extremely helpful to work with an experienced insurance broker who can guide you through the options.

Other levels of landlord insurance cover you should consider

In addition to rent guarantee insurance, there are several other types of landlord insurance that can offer valuable protection. While not all are mandatory, they can help keep your property and income protected. Here are some key levels of cover worth considering alongside landlord rent guarantee insurance to make sure that you will be fully protected:

- Buildings insurance: This covers the structure of your rental property, and it protects you if there is any structural damage, which may be caused by the weather or the event of a fire.
- Contents insurance: Contents insurance covers all the contents within the rental property owned by the landlord, e.g. carpets, furniture, appliances, etc.
- Unoccupied property insurance: This type of insurance protects your property if it's going to be empty for a few months between tenancies.
- Home emergency insurance: This gives you 24/7 cover and access to emergency repairs if your property needs urgent plumbing, electrical, or heating work.
- Landlord liability insurance: Landlord liability insurance provides financial protection to the landlord when a third party suffers an injury as a result of the rental property.
- Legal expenses insurance: Protects you if you face any legal expenses as a landlord.

Get in touch with our friendly and knowledgeable team for more information