26 August 2020

Rent Guarantee Insurance - what's the deal?

By Kevin Meek New Business Senior Account Handler

As the Government’s emergency legislation banning landlords from evicting their tenants came into place during the Coronavirus pandemic, many landlords have been asking this question – and rightly so as it can seem unclear.

When the pandemic started, most insurers withdrew their offerings of Rent Guarantee cover as it is only relevant when an eviction takes place. The Government introduced an emergency law stating that during this pandemic, landlords cannot evict their tenants. Because of this law, a Rent Guarantee policy is not currently fit for purpose. If insurers continued to offer this cover, they would essentially be mis-selling the cover as it cannot be used.

You already have a Rent Guarantee policy and your tenants aren’t paying – is your Rent Guarantee policy valid?

As a Rent Guarantee policy is designed to pay you once you start eviction proceedings on a tenant, and evictions are currently banned, no it isn’t.

Some landlords could be under the impression that their Rent Guarantee policies will pay ‘void’ periods of rent, i.e. without having to implement an eviction. This, however, is not the case.

Why are other Rent Guarantee insurance policies still being sold?

We are aware that some providers have been, and still are, selling Rent Guarantee cover, many of which might prove to be void if any further legislation changes come into effect. Very often these policies will not allow you to claim for the first 90 days of your policy and will not cover pre-existing arrears.

So, you must ask yourself the questions: Will it protect you when you need it? Is it fit for your desired purpose? Having a Rent Guarantee policy that cannot be used is as useful as being underinsured, or in some cases not having any cover at all!

Having a broker can prove essential

The current marketplace has become very complicated, with ever changing and updated legislation – especially following the pandemic – meaning further clauses and conditions in the fine print impacted on a regular basis. Making use of a broker can be a very good idea because we understand the small print and how that influences your situation. We’ll work hard to ensure you have the right protection in place for your situation.

In many cases, buying online may result in clauses and conditions being missed. If this were to happen you may end up with the wrong cover which could leave you vulnerable and out of pocket.

How can Protect My Let help…?

We are working very closely with our Rent Guarantee providers who have confirmed they are in the process of creating a solution to this problem. They are currently reviewing the legislation with the aim of building a product which is in line with the Government legislation and will provide the right protection for landlords. As soon as this is available, we will provide an update.

Woman working on a tablet

Find out how we can help you with your landlord insurance cover

We work with a panel of insurers which means we’re able to offer a variety of landlord insurance policies to suit your needs. You can find out more on our single-property landlord page.