Complete Guide to Landlords Rent Guarantee Insurance

Even tenants with the best-paid jobs face financial uncertainty, and impeccable references and a polished CV do not pay the rent if they become unemployed.

As a landlord, you need to protect your own finances and your investment by making sure the money is available to pay the mortgage if a tenant falls in to rent arrears.

Secondly, you need professional and effective legal advice to remove a tenant in arrears, so one who can pay their way can move in.

Landlord and tenant law is notoriously complicated and small mistakes can cost time and money

Rent guarantee insurance solves both problems.

What is rent guarantee insurance?

Rent guarantee insurance is a combination of two services for landlords –

  • Legal advice and expenses cover to evict a tenant in rent arrears – the cover should also include dealing with breaches of the tenancy agreement and claims against the landlord
  • Income protection insurance that pays out a sum each month so the landlord can continue to pay the mortgage if a tenant is not paying the rent

How does rent guarantee insurance work?

Your insurer will want a strict paperwork bundle before considering any application for cover that includes:

  • A signed assured shorthold tenancy agreement in force
  • Proof of tenancy deposit protection with an authorised scheme – and the deposit must cover at least one month’s rent
  • Proof that any legal requirements in respect of letting have been carried out – like getting electrical and gas safety certificates.
  • Tenants must be properly referenced before they move in – many rent guarantee policies will not pay out if a tenant is already in the property when the policy is set up.

Properly reference means running a credit check with one of the three agencies – Experian, Equifax or Callcredit

Some insurers will also want references from employers and previous landlords. Guarantors must be referenced as well.

Rent guarantee insurance will kick in after one month’s rent is missed to start legal proceedings to evict the tenant.

Most tenants who are in arrears will not leave until legal papers are served threatening to take them to court because they have nowhere to go.

They cannot rent another property because they will fail the referencing process and a local council will not house them because they are making themselves intentionally homeless.

Generally, the eviction process takes about three months and the rent guarantee cover will pay out to cover the rent and legal costs during that time.

Points to watch on rent guarantee cover

Rent guarantee cover is not standard between insurers, so shop around for the best deal.


  • Levels of cover – You may want to set the amount paid to cover the mortgage and other bills rather than the profit element of the rent to reduce the cost of cover
  • Term – Rent guarantee policies often last the length of the tenancy agreement, so if the tenant moves on to a rolling tenancy, check cover is still in place. The length of time the policy pays out can often vary – most should pay for at least six months
  • Excess – Set the deposit paid by the tenant to at least cover the rent guarantee policy excess
  • Legal expenses – Every lawyer has to follow the same eviction process, so do not pay over the odds for what is effectively the same service
  • Bundle your cover – some insurers offer a comprehensive buildings/contents/rent guarantee package for landlords at a discount, and will consider dropping the price even further if you have more than one property to insure

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2 Responses to Complete Guide to Landlords Rent Guarantee Insurance

  1. Rent Guarantee Insurance is not always the panacea you may think. It can be quite expensive – maybe £120 or more per six months. That can be quite a lot to take off your profit for the time period so before you buy it make sure you know what it will do to your bottom line. Also, what is the top level of cover – many will only cover up to £2500 per month on lost rent. If you rent out your property in London then that may not be enough cover for you. The other thing to consider is whether or not your tenants will pass the vetting process – if they are borderline risk they may not be covered by rent guarantee or the policy price may escalate. This could be a major problem if you need tenants quickly and they do not pass the rent guarantee vetting – then you have to decide to take a risk with the potential tenant without the extra insurance. Try The Property Insurer for all your landlord insurance needs, it offers rent guarantee insurance as well.

  2. S. David says:

    I need some urgent advice, I’ve been a landlord for approx. 18 months and have had the same tenant, who has been from day one been paying the rent as and when he has the funds to do so. I have rent guarantee insurance, so am a bit baffled as to why now I am being asked to pay it back.

    I started eviction proceedings, due to issues relating to the tenant not respecting my property, furniture etc and he’s put in a claim for disrepair, stating that was the reason rent was not paid. The agency insurers, paid out to me two months rent arrears and have told me that if it goes to court, I will be liable to pay back the arrears. How is this possible? when its rent that was owed to me in the first place, and is not the initial reason why eviction proceedings were taken up.

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