Landlord Rent Guarantee And Legal Expenses Insurance
Written by The Landlord on 21 Sep 2007If you’re a landlord that’s letting complete strangers rent your property, I highly recommend getting rent guarantee and legal expenses insurance. They’re relatively inexpensive, and could potentially save you a heap of money. Please note, “Landlord Rent Guarantee Insurance” is NOT the same as Landlord Building Insurance – the latter is related to the insurance of the actual property. Landlord Rent Guarantee Insurance covers any rental loss or damages inflicted by the tenant e.g. tenant falls into arrears.
What is Landlord Rent Guarantee And Legal Expenses Insurance?
It’s an insurance policy for Landlords that covers rent losses if tenants fall in arrears. Additionally, if the tenant runs up any legal costs (e.g eviction costs), then the insurance company will cover costs.
What you’re covered for will depend on the policy you acquire, each company/policy will most likely differ.
When I replied on Landlord Rent Guarantee Insurance
I’ve recently had to evict a tenant because she defaulted on rent. She ended up skipping on 2 months worth of rent, which cost me a little over £1.5k. That’s a lot of money; more than I was willing to part with. You can read more about that story in this blog entry, I’m Evicting My Tenant.
Luckily, I had taken out a rental guarantee and legal expenses insurance with a company called Homelet.
Homelet evicted my tenant for me and covered my lost rental income. Trust me; evicting a tenant is a lot of hassle, so it’s a lot easier if you work with an external company that handles it all for you.
All I had to do was fill in a homelet claims form which highlighted my tenant’s payment details, or lack thereof. Then my tenant was sent a legal eviction notice, a section 8. For more details on a section 8, go to my Evicting a Tenant article.
That soon got my tenant shaking in her rotten boots. 10 days later she had vacated my property.
Roughly 3-4 weeks later I received a cheque for just over £900 from homelet. With a lot of rental guarantor companies, they say they will cover 12 months rent, which they do. But they also charge an admin fee (a certain percentage). They charged me £600, hence why I received roughly £900 and not the full £1.5k. Overall, that was’t too bad, because if I didn’t have the insurance in place, I would have been out £1.5k. On top of that I would have had to make extra payments to take legal action against her.
If you plan on taking one of these policies out, make sure you understand how their pricing structure works.
Here are some of the other policies that a typical rental guarantor policy should cover:
- Rental payments guaranteed for up to a maximum of 12 months
- 50% of the rent paid, for up to 3 months after vacant possession has been obtained,whilst you find a new tenant
- Specialist in-house legal and claims team to ensure your claim is paid promptly
- Legal cover for eviction costs
- Rent guarantee and legal expenses cover, all tenants must be satisfactorily referenced prior to the comencement of cover
I got all that for under £100 on an annual basis. If you don’t want go through homelet, then find an alternative solution. There are loads of other companies out there that offer a similar service, but it’s definitely worth covering your back.
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I initially started this website because I wanted to document my every step from property idiot to property landlord,
in hope that people would find my site and help me along the way. I literally didn't have a clue about being a landlord
when I started this website.
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