As a landlord, it is essential to be knowledgeable about certain insurance types that offer protection for house owners. Rent guarantee insurance provides financial protection for landlords against rental income losses. If a tenant fails to pay his/her rent, this insurance covers the missed payment, ultimately ensuring cash flow for you as a landlord.
Rent guarantee insurance offers a wide range of coverage options for a set period of time, usually between 6-12 months, depending on the insurance provider. To unlock more information about rent guarantee insurance, ensure you read to the very end.
What is Rent Guarantee Insurance?
Rent guarantee insurance, also known as rent default insurance, is an effective insurance type that helps in mitigating the risk of financial loss for landlords. It protects house owners from financial ruin if a tenant is unable or refuses to pay his/her rent when it is due.
Your coverage kicks in 30 days after your tenant is unable to make the rent payments. This waiting period is different across insurance companies; reach out to your insurer to confirm the timeframe of the waiting period.
Who Needs Rent Guarantee Insurance?
Typically, if you own land or property and rent it out to people, then this type of insurance policy is for you. Rent guarantee insurance is a specialized type of coverage for landlords. Regardless of how cautious you are when accepting a tenant into your house, things can happen unexpectedly, and humans can be unpredictable. To protect yourself against financial ruin, purchasing rent guarantee insurance is a smart decision.
If you depend on the rent of your tenant to cover the expense of basic amenities for you and your family, we highly recommend rent guarantee insurance. This would help to ensure that you still maintain your lifestyle and standard of living even if your tenants don’t pay their rent on time. Depending on the insurance provider, your policy may cover eviction if a tenant has a chronic habit of not paying rents when they are due.
Types of Insurance That Landlords Should Consider
If you own a property and have tenants, then you should have this type of coverage:
- Property damage coverage.
- Liability protection
- Lost rental income insurance.
These types of coverage help protect you and your property against a wide range of perils, such as fire, earthquakes, bodily injury, and unpaid rents.
What Does Rent Guarantee Insurance Cover?
Essentially, rent guarantee insurance shields policyholders from financial loss if a tenant refuses or is unable to meet rent payments. This insurance type is designed to protect landlords from loss of income if a tenant defaults on payment of rent.
If you have property damage coverage, it would protect your property in the event of physical damage, but it does not offer coverage for loss of income.
In addition, a rent guarantee insurance policy may offer eviction protection, depending on your insurance provider. There are few insurance companies that include eviction coverage in their policy.
You can ask your insurance company if they offer this type of coverage for maximum protection. If they do, ask for the eligibility criteria for this coverage to be sure you qualify to receive the benefit it offers.
How Much Does Rent Guarantee Insurance Cost?
There are several factors that determine the cost of a rent guarantee policy; they include, but are not limited to:
- Type of property: Your insurance company will evaluate the location, size, and number of tenants you have in your house. Expect to pay higher premiums if your insurer identifies a wide range of risks.
- Coverage amount: The type of coverage you want to include in your rent guarantee policy determines the price. The higher the coverage, the higher the cost of your premium, and vice versa.
- Lease length: Also, if you lease out an apartment for a long period of time on your rental property, there’s every tendency to be charged a higher premium.
- Deductible: The deductible you choose on your policy also influences how your insurance provider sets your premiums. If you choose a higher deductible, you get lower premiums, but if your deductible is low, expect to pay more.
These are just some of the factors that affect the cost of rent guarantee coverage. It is important to note that the cost differs among insurance companies, and you can get an estimate of the cost if you shop around and compare quotes.
Rent insurance is a useful tool that is beneficial to both tenants and landlords. It offers landlords financial security against overdue or missed rent payments, ultimately guaranteeing a consistent flow of rental revenue. On the other hand, it also offers tenants peace of mind knowing that their home situation is more secure, even in the event that they run into unforeseen financial difficulties.
Although the cost of rent guarantee insurance is expensive, the benefit it offers landowners outweighs the cost of the policy. To ensure that the insurance policy meets their needs, landlords should carefully check the terms of the policy and the coverage limitations.
