Rent Guarantee Insurance Guide

If you’re a landlord, the monthly rent you receive from a property is probably pretty important to you. But what happens if your tenants stop paying? With rent guarantee insurance, your insurance company covers your missing rent for you while your tenants sort themselves out - or while you sort out an eviction. This guide explains the key features of rent guarantee insurance and what to look for in a policy.

What is rent guarantee insurance?

Rent guarantee insurance guarantees you your rental income for a set period, usually a year, if your tenants stop paying. Your insurance company will pay the rent you would normally receive, and will help you secure an eviction if your tenants can’t sort out their financial situation. The price of your policy will depend on how much rent you want to cover. 

How does rent guarantee insurance work?

Rent guarantee insurance covers income lost from tenants, in certain situations. Say, for example, your tenants stopped paying rent, rent guarantee insurance would enable you to receive the rent you would normally get from your tenants, and your insurer would help you to secure an eviction.

Do I need rent guarantee insurance?

It’s not a legal obligation for landlords to have rent guarantee insurance, but it could be useful – for instance if you couldn’t pay the mortgage on your rental property if your monthly rental income suddenly stopped.

Features of rent guarantee insurance

A rent guarantee insurance policy will usually cover you for a certain amount of rent a month up to 12 months, and will usually include some sort of legal expenses cover too, in order to help you deal with problem tenants, and pursue an eviction if you have to. Make sure you read the policy wording to understand how much cover you’ll get, and all the inclusions and exclusions.

Limitations of rent guarantee insurance

You may find that some insurers won’t cover certain types of tenants – for instance those on benefits or students. There will also be rules about references, what kind of references you get for new tenants or have for existing tenants – or how long the latter have been in residence without incident. Some policies will cover existing tenants, and others won’t, so always read the small print.

What references do you need for your tenants?

Your insurer will need you to have professional references, covering income and affordability, formal identification, and any outstanding debts, convictions or County Court Judgements (CCJs). You can get these done yourself by an independent referencing agency or go through a letting agency who will find and vet your tenants and have their own referencing systems in place.

Can you buy rent guarantee insurance by itself?

Rent guarantee insurance usually comes as an optional extra on top of a basic landlords’ insurance policy.

How much does rent guarantee insurance cost?

As rent guarantee cover is usually bought as an add-on to a landlords’ insurance policy, the cost will vary. It’s best to check with your landlord insurance provider to find out whether they can offer this and if so, how much extra this cover will cost.

Are legal fees towards an eviction covered?

Rent guarantee insurance for tenants usually includes an amount to cover the legal costs associated with pursuing an eviction. Typically this is £5,000. However, please note that you must consult your insurer before initiating an eviction to ensure that you are taking the required steps to receive reimbursement for legal fees.

Does Towergate offer rent guarantee insurance?

At Towergate we don’t currently offer this policy – but our partner company, Simple Landlords Insurance, does. provide rent guarantee insurance as an add-on when you buy a landlords insurance policy from them. You can get a 10% discount for your Simple Landlords Insurance policy – use the discount code TWGT10.

Towergate and Simple Landlords Insurance are both part of The Ardonagh Group, the UK’s largest independent insurance broker with global reach. We are a network of over 100 office locations and workforce of nearly 7,000 people

This is a marketing article by Towergate Insurance.