Is Rent Guarantee Insurance worth it?

Why risk it in the first place?

Buy to let landlords make up roughly 3% of the population in the UK, most landlords have worked very hard to earn their buy to let properties, and a lot of landlords are relying on their rents to come in to pay for their own residential homes, build generational wealth and have a pension nest egg that they can fall back on.

Why risk all of this to save a measly few hundred pounds, it doesn’t make sense.

Ok, hopefully, I have convinced you to take out rent guarantee insurance, but now I will explain to you what it covers and why it is important.”]

What does Rent Guarantee Insurance cover you for?

Firstly, please be aware that not all rent guarantee insurance covers are the same, I must warn you to read the terms and conditions of every policy to get an understanding of what you are covered for.

Don’t just go for the cheapest cover, many insurance companies will look NOT to pay out should a tenant forfeit on rent, go to a reputable company, and look at whom you are insured with, the insurance agency and the insurance company can be different people.

Please note that policy terms and wording usually change every 6 months, so please keep up to date with what it is you are covered for, below is what our insurance company covers at the time of writing this blog:

• Up to £50,000 worth of rent cover
• Up to £2,500 PCM Rental Amount
• 12 Month Nil Excess Policy
• Covering up to 15 months’ worth of non-payment of rent
• Up to 3 months of rental cover following eviction at 75% of monthly rent
• All tenant types considered
• Up to £100,000 Legal cover including eviction costs

Will my Rent Guarantee Insurance always pay out?

• All certificates have been served to the tenants before move in
• Annual passed gas safety check has been done
• CO2 alarms installed in the property with a heat detector
• Valid EPC is in place and issued to the tenant
• Landlord License is valid and in place
• EICR – Electrical Safety Certificate is valid and issued to the tenant
• Deposit is registered within a scheme and T&Cs are issued to a tenant with a prescribed information document signed by the tenant
• A valid AST is in place signed by all tenants with correct name spellings
• Satisfactory tenant referencing has been carried out with the correct affordability in place and/or a valid guarantor in place with a signed guarantor agreement

Always check the T&Cs of the policy wording and make sure you are following the procedure.

The above is exactly why we recommend a good and trusted lettings agency (not just the cheapest agency) to carry out the due diligence checks on the tenants and the checklist procedure to make sure that you are covered as a landlord.

You also need to be protected when evicting the tenants too, regardless of failure to pay rent, should a judge see that a landlord has not been law abiding, they will throw the case out of court, and you will continue to be unpaid in rent. So, this is serious stuff!

Conclusion

Rent guarantee insurance is a must, its costs are minimal should your tenant forfeit on rent. It can take several months to evict a non-paying tenant, therefore, it is highly recommended to protect your asset, pension, future, and peace of mind by obtaining a good rent guarantee insurance with the right cover level of cover.

Read through our Guide for Landlords or get in touch with us at Keystones should you want any more advice, we would be happy to help.

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