Whether you’re new to the property investment game or a well seasoned landlord looking to scale up your business, you need to protect your income.
Even the most reliable tenants can fall into unexpected circumstances that prevent them from being able to afford their rent, which is why rent protection and legal expenses insurance should be at the forefront of your mind when preparing a property to let.
Kings Lettings have created this guide to explain what rent protection cover and legal expenses insurance are, and how they can protect your investment.
RENT PROTECTION INSURANCE
WHAT IS RENT GUARANTEE INSURANCE?
Rent protection insurance, also called ‘rent protection insurance’, is a form of legal protection that covers your rental income, should your tenants be unable to pay it.
WHAT DOES RENT GUARANTEE INSURANCE COVER?
Depending on your insurance policy and provider, rent guarantee insurance can cover:
- Up to 6-12 months’ rent, if your tenant falls into arrears
- Mediation service to settle dispute between you and your tenants
- Access to legal solicitors who can offer legal advice
WHAT DOESN’T RENT GUARANTEE INSURANCE COVER?
Most insurance providers will have different policies surrounding rent guarantee insurance, but you’ll generally find that they don’t cover:
- Commercial properties such as offices and shops
- Your property once it’s on the market
- Rental arrears in the case that the tenants have already left the property. This could be voluntarily or through eviction
- Properties that aren’t let with an assured shorthold tenancy
- The first 30-90 days of a tenancy
- Legal expenses to cover disputes relating to the eviction, repossession of a property or repayment of rent arrears
HOW MUCH IS RENT GUARANTEE INSURANCE?
The cost of rent guarantee insurance depends on:
- The size and location of the property
- Who your tenants are; some tenants are considered higher risk and you’ll therefore receive less cover
- The level of cover you choose. Higher rent will require a higher level of cover and will therefore be more expensive
HOW TO GET RENT GUARANTEE INSURANCE
To get rent guarantee insurance and legal cover, you will need to speak to your insurance provider. They will require details about your property so it’s best to prepare the following information beforehand:
- The location, size and type of property you want covered
- Tenant information including employment status and number of tenants in situ
- Whether you carry out credit checks, gather references and have guarantor information regarding your current tenants
The information your insurance provider requires for rent guarantee insurance should be listed on their website.
You may also require legal expenses cover to pay for the cost of legal action if your tenant continues to avoid rent payments.
LEGAL EXPENSES COVER
WHAT IS LEGAL EXPENSES INSURANCE?
Legal expenses cover is a form of landlord insurance that provides financial protection in the case of a rental dispute, including legal action and court proceedings.
WHAT DOES LEGAL EXPENSES INSURANCE COVER?
Depending on your insurance provider, legal expenses insurance can cover:
- Repossession of a property
- Rent disputes
- Property damage
- Eviction of squatters
- Contract disputes
- Legal costs if you tenant claims that you’ve breached your obligation as their landlord
For further information on how to protect your rental income, visit our guide on landlord insurance. Alternatively, if you’re thinking of letting your first property, take a look at our First Time Landlords Guide, Landlord FAQs or contact Kings Lettings for professional guidance.
KINGS LETTINGS, 103 HIGH STREET, MAIDENHEAD, BERKSHIRE, SL6 1JX
Lettings and property management offices in London, Reading, Maidenhead, Staines & Windsor.
T: +44 (0)16 2863 2188 | E: MAIDENHEAD@KINGS-LETTINGS.CO.UK