“It feels so unjust. You own a property, you let it to someone on the promise of a fair rent, and they don’t pay up. More often than not, you will have a mortgage to pay, and the lender expects its monthly instalments. It feels like the property owner takes all the risks. Surely my insurance broker will be able to find a way to mitigate the risk of arrears with insurance.”
This is a common plea, and help is at hand. Rent Guarantee Insurance helps to redress the balance in favour of the property owner. In addition to replacing your lost income, the insurance company will bring all of its experience and organisational skills into securing the eviction of the errant tenant.
The popularity of this kind of insurance has grown since the dawn of the recession. People can fall behind on their rent for a huge number of reasons, whether it’s trades-people struggling to find work, professionals who’ve fallen on hard times or people claiming benefits who’ve just overspent on a given month. However, the vast majority of people don’t move into a rented property with the intention of getting into arrears, but the landlord has a right to collect rent all the same.
It is very rare for a landlord to own a property and not actually need the rent. The boom in “buy to let” mortgages has meant that many very normal people have become landlords. These people need their rental income to pay their mortgage and avoid the banks repossessing the property from them. That’s why they are willing to spend a proportion of their rental income on insurance.
With this type of insurance there are two main policy types, there is the standard insurance against lost income from tenants going into arrears, and for a premium, the insurance company will pay the rent if the tenant does not. Some companies ask for credit checks to be carried out but not all of them will, and some will not insure you if your tenants are claiming benefits, but some will.
Secondly, the insurance company will often help you to secure an eviction if your tenant simply can’t keep up. This is very helpful, and you should make sure you have this cover with your insurances. Most landlords do not have the time or the skills to succeed in this minefield. If you are a landlord/property owner, your insurance broker will be able to advise you on the correct insurance for your property.
If you are a landlord and you are looking for some friendly advice on property owners insurance, you should visit Coversure, they are one of the UK’s best providers of insurance for anything from office insurance to caravan insurance.
