Is tenant default the same as rent guarantee?
Also known as rental income loss insurance or loss of rent insurance, rental guarantee insurance is a risk management solution that protects property owners from loss if a tenant defaults or is unable to pay for any reason beyond their control. Rent guarantee insurance, also known as tenant loss insurance, is a common type of coverage that you can add to your landlord insurance. It can protect you from severe financial impact if tenants don’t pay their rent. Rental guarantee insurance covers rent if your tenant defaults on payments.
You can purchase policies for six and 12-month leases. Although lessors’ insurance policies vary between different insurers, most offer optional coverage to protect rental income. In addition to rental income and popularity with tenants, it’s worth investigating crime rates in the region and flood risk, as these factors can impact your landlord’s insurance premium. The main reason for a home tour is to assess the current condition of your rental property, both inside and outside.
You’re not required by law to take out a specific rental policy, but remember — traditional home insurance doesn’t cover you for rental activities, and a mortgage lender usually requires you to have certain landlord protection before you rent out your property. In such cases, the owner would be paid even if the property is empty or the tenant does not pay rent. Even the best tenants can run into tough times, and more than half (58%) of landlords and brokers cited a tenant who was behind as the most common reason for ending a lease, according to government findings. In addition, your tenant may need a specific type of lease, as well as protection of the tenant’s deposit under one of the government-approved rental deposit schemes.
Student rent is often subsidized or covered by student loans, and student rentals generally offer high returns. Landlord insurance with a rental guarantee and legal costs is a perfect combination for any professional or private landlord and provides coverage if your tenant defaults and doesn’t pay the rent for your property. Remember that it is separate from the landlord insurance, which covers property damage but no loss of rent. On average, it takes 42 weeks to evict a tenant; that is about 10 months of loss of rent during the time it takes to regain the property.
Getting involved in litigation with your tenant over things like rent collection, property damage, or even eviction can prove stressful, costly, and time-consuming. However, as a yardstick, Simply Business figures show the typical cost of a one-year tenant statement policy to be less than £75 (although legal coverage must be purchased separately).