Rent guarantee insurance becomes more appealing

Permalink: Rent guarantee insurance becomes more appealing
by Gill Montia

HomeLet, the specialist provider of insurance to the rental sector, is alerting landlords to the fact that rent guarantee claims are increasing.

The recession and the rise in unemployment resulting from the credit crisis mean that more tenants are facing financial difficulties and could therefore be unable to pay their rent.

Landlords who do not have insurance that protects rental income are therefore more at risk of incurring rental arrears and possibly legal fees.

Last year, HomeLet paid out £2.7 million in rent guarantee claims but the firm expects the figure for 2008 to be higher and other providers of landlord insurance are making similar reports.

According to Let Insurance Services, higher premiums may deter some landlords from covering themselves against the risk of defaulting tenants but this could prove to be a false economy, given rising unemployment.

Meanwhile, Philip Suter, spokesman for online insurer jml-Property-Insurance.co.uk, advises that premiums are currently between 1.5% and 3% of monthly rental income and reminds landlords that the cost can be offset against income tax liability for the rental property.

With regard to tenants, many risk going without possessions cover but for those who are insurance minded, Mr Suter explains that with some policies, a tenant can add cover against accidental damage to their landlord’s property and safeguard their deposits.