Rent Guarantee Insurance
Rent Guarantee Insurance, landlord or tenant, insure your rental payments, landlords get paid rent when tenants donít or wonít pay and tenants even those on housing benefit get the money to pay the rent when sickness or lost job means they canít pay.
When the tenant canít pay the rent because they have lost their job or been off work ill, whether the tenant canít pay the rent just once or the tenant is in severe arrears with the landlord, tenant rent guarantee insurance will provide the money to pay the tenants rent, the money comes from an insurance claim the tenant makes when they are out of work or cannot work, proof of losing your job or sickness will usually be required and then the insurance company will pay the rent for the tenant.
For the tenant the rent guarantee insurance premium can be paid monthly by direct debit or annually, this payment insures that when you lose your job or cannot work because you are ill that the insurance company will pay the rent on your behalf.
Landlord Rent Guarantee Insurance
For landlords rent guarantee insurance can be taken out and paid monthly or annually, the RGI (Rent Guarantee Insurance) will provide money to the landlord every week or month whichever is the rent payment schedule, this money will insure that the landlord is not out of pocket for the tenant being unable to pay their rent.
Tenant Rent Guarantee Insurance
The tenant make be unable to pay the rent to the landlord because they have been made redundant or otherwise lost their job or they make be sick with an illness that lasts a week or more or a long term illness, either way with rent guarantee insurance the insurance company will continue to pay the missed rent to the landlord, this means the landlord will have a continual monthly or weekly income just as if the tenant was still paying the rent.
The tenant may be unable to pay the rent to the landlord because the tenant has lost their job or been sick, but also the tenant may be refusing to pay the rent to the landlord for example if there is a dispute over repairs to the property the tenant may be refusing to pay rent until the repairs are taken care of, the landlord may dispute these repairs especially if the damage was caused by the tenant, the rent will still continue to get paid by the insurance company even for cases of dispute between tenant and landlord.
Buy To Let (BTL) Rent Guarantee Insurance
Buy To Let (BTL) landlords may be especially effected by a tenant that is unable or refuses to pay their rent as if there is a mortgage on the property the mortgage will still need to be paid by the landlord even if the tenant is not paying, this will obviously put the landlord out of pocket and possibly into financial difficulties themselves, with rent guarantee insurance the landlord will be able to pay the mortgage company the monthly mortgage payment as the rent will still be paid by the insurance company.
Rent Guarantee Insurance For Letting Agents
Rent guarantee insurance for letting agents is available if the letting agent is the person or company that is collecting the rent, you cannot have RGI if you are not acting as the landlord or the landlords appointed representative, if the letting agent collects the rent then the letting agent can take out rent guarantee insurance and the insurance company will reimburse the letting agent for the loss of income, the rental agency will then be able to pass the rent due the landlord minus the letting agents fees so that both the letting agent and the property owner are both recompensed when a tenant fails to pay the rent.
If the tenant is in dispute with the letting agency then the letting agency still has a duty to pay the rent due to the property owner regardless of the dispute or failure of the tenant to pay the rent, this will put the letting agent at significant financial loss, taking out rent guarantee insurance will insure that the letting agency will not be out of pocket when the tenant cannot or wonít pay the rent.
Rent guarantee schemes are popular for both landlord and tenants as they insure that the landlord will be able to receive the rental income and the tenant will be able to pay the rent, it is not a requirement for a tenant or a landlord to have rent guarantee insurance although the letting agency or landlord may try to force the tenant to take out rent guarantee insurance but there is no legal duty to take out the insurance, however it is in both parties interests if at least one party has rent guarantee insurance.
The Landlord Should Not Rely On The Tenant To Take Out Rent Guarantee Insurance
The landlord should not rely on the tenant to take out rent guarantee insurance as the tenant is usually in a less financially strong position than the landlord, itís a business expense if your a landlord, rent guarantee insurance for a single property or a portfolio of properties will insure that you will always be paid your rental income.
Tenants who are worried about their jobs or who suffer from a medical condition that means they may need time off work and therefore might not get paid when they are not working or will receive statutory sick pay which will be insufficient to pay the rent, so the tenant able to take out rent guarantee insurance will protect their right to remain in the rental property which will make looking for a new job if they have been made redundant or recovering from illness if they have been sick that much easier when they know the rent is paid and they are not at risk of eviction for unpaid rent.
Rent Guarantee Legal Cover
The rent guarantee insurance may come with legal cover so that any disputes you have with the tenant or legal costs you incur for example serving eviction orders on tenants who are seriously in arrears in their rent or who have caused significant damage to your property will find the legal costs are covered so any legal expenses like hiring solicitors to drafting documents or representing you in court can be claimed back on your legal cover where the insurance company will pay out compensation for the legal expenses you have incurred.
Empty Property Rent Guarantee
Even if the property is empty the landlord will get paid rent guarantee insurance, say for example the tenant has a six month tenancy and they have broken the tenancy and left the property without a forwarding address, the landlord must now pay the rest of the tenancy agreement themselves, but with rent guarantee insurance the insurance company will pay the monthly or weekly rent payments even if the tenant has disappeared leaving the landlord with the rent bills.
The rent guarantee insurance may also include tenant damage protection where any damage the tenant does to the property for example ruining carpets, damaging furniture, damaging bathroom suites or breaking fixtures will all be covered by the insurance so the landlord will be able to make a claim for these damages and receive compensation.
What is Rent Guarantee Insurance (RGI)?
Rent Guarantee Insurance (RGI) is insurance taken out by either the tenant or the landlord to pay the rent when they are unable to pay (tenant) or when no rental income is received (landlord) the rent guarantee insurance will pay out when rent is not paid because the tenant is out of work or sick or has refused to pay because the tenant is in dispute with the landlord.
Both the landlord and the tenant can separately take out rent guarantee insurance, both landlord and tenant may chose to take out the insurance, one of them, or none of them, may choose to take out the insurance, either tenant or landlord may take out rent guarantee insurance, the two insurance polices work totally independently of each other.
The tenant taking out rent guarantee insurance means that the insurance company will provide the tenant with the money they need to pay their rent when the tenant is out of work or cannot work due to sickness whilst the rent guarantee insurance taken out by the landlord means that the landlords insurance will pay the landlord the missing rent, it is in both parties interest to take out rent guarantee insurance but neither party is required to do so.
Rent Guarantee Insurance For Tenants
Rent guarantee insurance for tenants sounds like one extra expense each month, but the threat of losing your job or falling ill and being unable to pay your rent is very real, as a tenant you might have thought of redundancy insurance to insure yourself against losing your job, generally rent guarantee insurance will be cheaper and have similar aims in that your be able to pay your rent whilst you look for another job, with rent guarantee insurance your also covered as a tenant if you fall ill and cannot work, you might be thinking about health insurance as an insurance you can claim on for your rent, rent guarantee insurance will provide the money for rent if you lose your job or if you cannot work, unlike redundancy insurance and health insurance it wonít cover wider payments like your salary or compensation for injury but it will allow you to pay your rent and remain in your home whilst you recover from illness or look for a new job.
As a tenant if you are long term ill and diagnosed with a medical condition that means you will be off work for a long time, the rent guarantee insurance will at least pay your rent and allow you to stay in your home, this is obviously good for both the landlord and the tenant, the tenant gets their rent bills paid and the landlord gets their rent money paid.
Donít rely on either the landlord or the tenant having rent guarantee insurance, as the insurance is for the person who took out the policy, tenant or landlord, if your a landlord and you have taken out rent guarantee insurance you will have your rental income protected but this will in no way help the tenant, the tenant is still unable to pay their rent and with the legal cover as part of the insurance package the landlord has taken out, the landlord can evict the tenant for non payment of rent, so you see the landlord having rent guarantee insurance does not mean that the tenant does not have to pay the rent, it just means that the landlord will get their rent paid and also be in a position to take legal action against the tenant.
The tenant should take out their own rental insurance to insure that they can continue to pay the rent through every eventuality, you might think that your job is safe and that you wonít lose your job through redundancy but you canít guarantee your health, a severe cold or flu can put you off work for several weeks and if your income stops or severely reduces whilst you are not working you will not have enough money to pay the rent unless you have savings, the cost of the monthly or annual premium for rent guarantee insurance is so much less than you will be claiming that it makes sense to take out the insurance.
If landlord and tenant are in dispute over a property the rent guarantee insurance will still be paid out to either the landlord or the tenant (whoever took out the insurance) the fact that the tenant is withholding the rent does not mean that a claim cannot be made, the tenant could be in dispute with the landlord for a long period of time and be taken ill and require the rent guarantee insurance to pay out which it would do regardless of dispute, if the tenant also takes out legal cover as part of their tenants insurance then they can use this legal cover to have a solicitor take the landlord to court.
Conversely the legal cover provided to the landlord with rent guarantee insurance can also be used to take the tenant to court over any disputes about non payment of rent.