Rent Guarantee Insurance

domcastro

Is this insurance worth getting if you plan to become a landlord? The insurance seems cheap considering they're willing to pay upto 50k (for eg) in lost rent. Anyone had eperience of it?
thanks

eddddy

A friend uses them. He had to make a claim when a tenant 'did a runner' after falling behind with the rent. The insurance company paid out without any problem - although it was only a few hundred pounds, after the deposit was taken into account.

As you may know, the insurance company has to approve a new tenant before you sign the lease (they run credit checks etc).

My friend said that he was very careful to follow the insurance co's policy requirements to the letter (if the tenant defaults, letters have to be sent within specific timescales etc.)

After paying out my friend's claim, the insurance co used tracing agents to find the ex-tenant to get their money back. The ex-tenant was taken to court by the insurance co - he had to pay the missing rent, plus the insurance co's fees/expenses for tracing him of over £1000.

Perhaps the insurance companies have a good record for tracing defaulting tenants, and charging them high fees - which is what keeps the premiums low.

Maybe it's only fair to warn tenants whose rents are guaranteed by insurance companies that they may have to pay a very high price if they default on their rent.

opinions4u

Insurance companies are there to make money. So expect them to be making a profit out of policyholders with this sort of cover.

That's not to say you shouldn't take cover, but it would probably be more cost-effective to self insure by building up savings to cover the situation of a tenant doing a runner.