Benefits of Rent Guarantee Insurance
When a landlord invests in a property, a suitable insurance policy is usually swept under the rug when it comes to priorities. A standard home insurance policy will not cover all the landlord’s needs. This is because there are too many variables when it comes to renting out, such as third party damage. One of the main areas of concern is ‘what happens when my tenant fails to pay rent?’ Most landlord insurance policies will cover damage from tenants to the building, but the policy won’t stretch as far as paying compensation for missed rent. However, some policies will include cover expenses for evictions and cover for rent payments lost while the property is uninhabitable following a legitimate insurance claim.
As a landlord, it is important for you to abide by the contract rules that were stated between you and your tenants. If your tenant has failed to pay up one month or has come short with rent payments, it may be tempting to let them off and have the payments made up at a later date. For example, if you are friendly with them, this may seem like a suitable course of action. This is a bad idea because these sort of actions will invalidate any rent guarantee insurance claims that you want to make in the future. In your time as a landlord, it is almost certain that you will come across tenants that can’t pay up for a number of reasons. These reasons can include a sudden drop in available finances (such as job loss) and simply not wanting to pay out of spite. You have nothing to worry about if you have a rent guarantee insurance policy. A claim can be made on your policy and the insurer can chase the tenant up for the missed payment(s).
With rent guarantee and legal expenses insurance, you will not have to waste your time chasing up tenants – your insurance company will do it for you. This leaves you with more free time to work, rest or just have a little time off. These types of cover are now more important than ever. This is because a recent tenants arrears tracker has reported that 99,000 cases of tenants owing rent payments, the highest number since the tracker was started in 2008. Benefit payments have recently been cut and capped, which may also lead to some people being unable to make the rent every month. In other words, rent guarantee insurance is becoming more and more attractive to landlords.
James Savery, 14 August 2013