12 May Rent Guarantee Insurance
Rent Guarantee Insurance
Have you had to enact rent deferrals or payment plans due to unpaid rent during COVID-19? Rent guarantee insurance protects landlords in situations like these where the tenant cannot pay their rent (due to being unemployed). In fact, some policies cover up to 6 months of rent loss. Although many landlords might opt not to fork out additional money on rent guarantee insurance, circumstances can change. And, the Coronavirus pandemic is proof of this. Keep in mind that rent guarantee insurance is separate from landlord insurance, which covers damage to a property but not loss of rent. With this in mind, we offer some insight on how rent guarantee insurance works.
Disclaimer: The information provided here is for general informational purposes only.
What Is Rent Guarantee Insurance?
The number one concern for most landlords is a tenant not paying rent. Rent guarantee insurance is a policy designed to protect landlords against loss if a lessee defaults. This insurance pays the monthly rent for a set period of time if the covered tenant stops making payments. Tenants stop paying their rent for many reasons such as being unemployed due to the Coronavirus. Rental guarantee insurance acts as a safety net in the event something catastrophic like this happens among other things. This can include military deployment, job loss, cash flow issues and so on. With nearly a third of renters not paying their rent on time, rent guarantee insurance is something every landlord should seriously consider.
Rent guarantee insurance covers nonpayment of rent if a tenant defaults on rent payments they’ve agreed to in their lease.
How Rent Guarantee Insurance Works
This type insurance is purchased by the landlord or the property management company (when they have full power of attorney) and typically covers a single lease agreement for a single residential rental unit. In most cases, the protection usually kicks in and starts paying the landlord directly after just one month. If a tenant stops paying rent, the landlord files a claim and collects the amount of rent owed under the lease agreement.
The Most Common Reasons Tenants Default On Their Rent:
- The tenant lost their job
- Has a change in financial stability
- The tenant decides to move-in with their significant other
- Tenant got a job offer that is 100 miles or more away from their current home
- The tenant disappears and abandons the unit without giving notice
Protecting Your Rental Income
In the past, landlords have relied on a combination of security deposits and tenant screening to protect their rental income. But with the amount of uncertainty we now live with, protecting it is more important than ever. If you need help navigating this issue, you may want to consider hiring a property management company to help you.
Whether you are looking to change property managers or simply want to hire one for the very first time, we can help. We manage all types of residential properties including homes, condos, and multi-family properties such as duplex and triplexes, and even small apartment buildings. If you are interested in saving time, money, and the stress that comes along with managing your own rentals we have a management solution that is right for you. Call us today at (858) 576-2176.