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Rent Guarantee For Landlords - When your Tenant is unable to pay their Rent

Rent Guarantee Insurance

As a Landlord, the risk is always there; when your tenant suddenly can't pay the rent and is unable to pay what is already due. Even if you have undertaken the best checks and references, you can never predict a tenant facing troubled times such as losing their job or becoming ill, ultimately resulting in them not being able to pay the rent.

If this was to happen, would you be able to cover your expenditure and costs over a prolonged period of time?


Certain insurers we work with for property owners and landlord insurance, allow cover to be tailored to include what is called Rent Guarantee, as an extension to a legal expenses add-on policy, which can protect your cash flow from circumstances such Tenant Default; providing cover for non-payment of rent and for loss of future rental income for in most cases up to 12 months (a first month excess may be applicable).

This is a popular addition for landlords who have buy-to-let mortgages and rely on the rental income to cover the mortgage repayments on the property. However, when considering your insurance, it’s important to read the terms and conditions of the policy as there are likely to be a list of guidelines you must follow in order for the cover to spring into action. As a brief example, conditions for Tenancy Default can include (and not be limited to) the following:

  • You must obtain satisfactory references for each tenant or guarantor before the tenancy agreement started for rent arrears cover.
  • Obtain a minimum of three satisfactory references prior to tenancy, including one from the tenant’s employer (unless retired), a financial reference (e.g. a bank) and one other referee. If you have any doubts as to the integrity or financial position of the tenant expressed in any reference or there is a lack of response to any enquiry - You should consider not proceeding with the letting.
  • Keep clear, up-to-date rental records.
  • Some policies also carry exclusions for certain kinds of tenants, such as students and recipients of Housing Benefit.

Many of the policy requirements listed above will form part of your usual processes, however, every insurance company is different. It is important to be aware of your responsibilities as a landlord by checking the terms and conditions of your policy carefully. Failure to do so may result in your claim being rejected; leaving you to pick up the bill for any lost earnings when your tenant is unable to fulfil their rental obligations.

For further advice or to arrange a complimentary review of your insurance please contact our teams on:

Torquay: 01803 652000 Exeter: 01392 880000 Holsworthy: 0333 2026504

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