Landlord Rent Guarantee.

jubjub

I have just found out that the letting agency that handles my property (fully managed) and are charging me for a Rent Guarantee policy are not doing this through an insurance company but "underwriting" the risk themselves. I am not happy about this to say the least but is it actually Legal?

davidmcn

No reason why not in principle. You pay them a fee, in return for which they pay the rent if the tenant doesn't. 

theartfullodger

Is this by any chance a rent guarantee scheme/scam where you rent too agent (agent is tenant) who then (agent as landlord) rent out to occupants (agent's tenants, no contractural relationship with you)?

AdrianC

Yes, perfectly.
The end result is the same - the claims criteria get met, they pay out the underwritten loss.
Does it make a difference if they pay out or if some insurer elsewhere pays out?

It says something about their perception of ever having to pay out, though, which says something about the value of the policy.

greatcrested

In principle yes.

But you need to read the terms carefully.

As suggested by artful, are you 100% sure you are not renting (commercially) to the agent who is sub-letting via an AST tothe occupants? This might breach your mortgage terms and/or landlords insurance.

jubjub

No, the letting agent isn't subletting or anything. I'm just concerned about there ability their ability to pay if they had a lot of claims come in for instance because of the effects of Covid on jobs. Also say for instance you were in the Pub moaning about your car insurance being £1500 and Dave in the corner offers to do it for £200 and scribbles out a policy on the back of a beer mat. How would that stack up if the police stopped you?

davidmcn

jubjub said:

No, the letting agent isn't subletting or anything. I'm just concerned about there ability their ability to pay if they had a lot of claims come in for instance because of the effects of Covid on jobs. Also say for instance you were in the Pub moaning about your car insurance being £1500 and Dave in the corner offers to do it for £200 and scribbles out a policy on the back of a beer mat. How would that stack up if the police stopped you?

That's completely different, given that the claim for a motor accident could potentially be in the millions.

If you buy "boiler cover" or "breakdown cover" do you think it's actually underwritten by an insurance company, or just that you'll get the service when you need it without further cost?

eddddy

jubjub said:

No, the letting agent isn't subletting or anything. I'm just concerned about there ability their ability to pay if they had a lot of claims come in for instance because of the effects of Covid on jobs. Also say for instance you were in the Pub moaning about your car insurance being £1500 and Dave in the corner offers to do it for £200 and scribbles out a policy on the back of a beer mat. How would that stack up if the police stopped you?

It's for you to judge how financially stable and trustworthy the letting agent is. 

If they're rogues, they might decide not to pay you - so you might want to take legal action against them. And/or if they go bust you'd probably lose any money they owe you.

(The police don't stop you for not having rent guarantee insurance. It's not a criminal offence.)

[Deleted User]

jubjub said:

No, the letting agent isn't subletting or anything. I'm just concerned about there ability their ability to pay if they had a lot of claims come in for instance because of the effects of Covid on jobs. Also say for instance you were in the Pub moaning about your car insurance being £1500 and Dave in the corner offers to do it for £200 and scribbles out a policy on the back of a beer mat. How would that stack up if the police stopped you?

A lot of rent guarantee policies from large insurers such as Direct Line aren’t paying out for Covid. You’ll probably find that they have some get out clause in the case of pandemics or similar. 

eddddy

Lover_of_Lycra said:

jubjub said:

No, the letting agent isn't subletting or anything. I'm just concerned about there ability their ability to pay if they had a lot of claims come in for instance because of the effects of Covid on jobs. Also say for instance you were in the Pub moaning about your car insurance being £1500 and Dave in the corner offers to do it for £200 and scribbles out a policy on the back of a beer mat. How would that stack up if the police stopped you?

A lot of rent guarantee policies from large insurers such as Direct Line aren’t paying out for Covid. You’ll probably find that they have some get out clause in the case of pandemics or similar. 

If it's a 'Home Made' scheme written by a letting agent, it might have many more exclusions (or much less cover) than than the policies provided by proper insurers.

If the letting agent is a bit of a rogue, it might have so many exclusions and so little cover that it's worthless. The OP needs to read the T&Cs to find out.

jubjub

Thanks eddddy. The point is that I have used them for about 17 years and I had at the start documentation from them that they have used an insurance company. It has now transpired that they no longer use an insurance company and are underwriting it themselves but I have not received any terms and conditions at all. It is only in the last few days that it has come to light that the rental guarantee has been missed being charged for the past 3 years to me and they are now asking for back payments which I do not agree with due to them underwriting it themselves and not ever having had terms and conditions. Also, since the last payment I was charged they have increased the amount of which I had no knowledge of either. They are demanding payment stating it is due because I was covered. Where do I stand with this?