Rent Guarantee Insurance: Is It Worth It for Landlords UK?
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Rent guarantee insurance pays your rent if tenants stop paying, typically covering 6-12 months of arrears plus legal costs for eviction. It costs around 3-5% of annual rent. Worth considering for landlords reliant on rental income or with high-value properties.
With rent arrears and eviction timelines stretching longer, many landlords are considering rent guarantee insurance as a safety net. Here's everything you need to know.
What is rent guarantee insurance?
Rent guarantee insurance (RGI) is a policy that pays your rental income if your tenant stops paying rent. It also typically covers the legal costs of evicting the tenant.
Think of it as income protection for landlords. If your tenant defaults, the insurer steps in to pay your rent while you go through the eviction process. This can take 6+ months, so the cover provides significant peace of mind.
It's sometimes called "tenant default insurance" or bundled as part of a comprehensive landlord insurance policy.
What does rent guarantee insurance cover?
Most policies cover unpaid rent, legal expenses for eviction, and sometimes additional costs like property damage by tenants.
| Coverage | Typical Limits | Notes |
|---|---|---|
| Rent arrears | 6-12 months or £25k-£100k | Paid monthly until tenant leaves |
| Legal expenses | £50,000-£100,000 | Eviction, court fees, bailiffs |
| Tenant damage | £5,000-£25,000 | Not all policies include this |
| Rent recovery | Included | Pursuing tenant for arrears |
| Alternative accommodation | Limited cover | If property uninhabitable |
How much does rent guarantee insurance cost?
Expect to pay 3-5% of annual rent for a standalone policy. For a property renting at £1,000/month (£12,000/year), that's £360-£600 annually.
Premiums depend on:
- Rental value - Higher rents mean higher premiums
- Cover level - More months of cover costs more
- Tenant type - Benefit tenants may cost more
- Location - Some areas have higher default rates
- Excess - Higher excess reduces premium
Many landlord insurance policies offer RGI as an add-on for £100-£200 extra.
Requirements for coverage
Insurers require tenant referencing, a written tenancy agreement, and rent to be up-to-date when the policy starts.
Typical requirements include:
- Tenant referencing - Credit check, employment verification, previous landlord reference
- AST in place - Written assured shorthold tenancy agreement
- Rent up-to-date - No existing arrears when policy starts
- Right to Rent check - Proof tenant can legally rent in UK
- Deposit protected - In a government-approved scheme
- Property compliance - Valid gas safety certificate, EPC, etc.
If you don't meet these requirements, claims can be rejected. Most insurers offer their own referencing service.
When does rent guarantee insurance pay out?
Typically after 1-2 months of missed rent (the excess period). You must report the arrears promptly and follow the insurer's claims process.
- Tenant misses rent - First missed payment
- Contact tenant - Attempt to resolve informally
- Report to insurer - Usually within 30-45 days of first missed payment
- Excess period - 1-2 months typically not covered
- Claims begin - Insurer pays rent monthly
- Legal action starts - Insurer's solicitors handle eviction
- Payments continue - Until tenant leaves or limit reached
Exclusions to watch for
Pre-existing arrears, tenants who fail referencing, and disputes where you've breached the tenancy are typically excluded.
| Exclusion | What it means |
|---|---|
| Pre-existing arrears | Arrears before policy started aren't covered |
| Failed referencing | Tenant must pass insurer's checks |
| Late notification | Report arrears within time limit (30-45 days) |
| Landlord breach | If you've broken tenancy terms |
| Unlicensed HMO | Property must be properly licensed |
| No written tenancy | Must have proper AST in place |
| Family tenants | Letting to relatives often excluded |
Is rent guarantee insurance worth it?
It depends on your circumstances. For landlords who rely on rental income to cover mortgages, or those with high-value properties, RGI provides valuable protection.
| Pros | Cons |
|---|---|
| Protects rental income during voids | Adds 3-5% to annual costs |
| Legal costs covered (saves £5k-£15k) | Strict referencing requirements |
| Professional eviction handling | Excess period means 1-2 months not covered |
| Peace of mind | Many exclusions to navigate |
| Useful with longer eviction times | May not cover all tenant types |
Consider RGI if:
- Rental income covers your mortgage
- You have a high-value property
- You're a portfolio landlord who can't absorb losses
- You want professional legal support included
You might skip it if:
- You own the property outright
- You have significant cash reserves
- Your tenant has an excellent track record
- You have other legal expenses cover
Top providers comparison
Several specialist insurers offer rent guarantee cover. Here's how they compare on key features.
| Provider | Max rent cover | Legal cover | Starting price |
|---|---|---|---|
| HomeLet | 12 months / £100k | £100,000 | From £199/year |
| Alan Boswell | 12 months / £50k | £50,000 | From £149/year |
| Total Landlord | 15 months / £75k | £75,000 | From £159/year |
| Simply Business | Varies by policy | Included | Quote-based |
| CIA Landlords | 12 months / £100k | £100,000 | From £180/year |
Always compare quotes and read the full policy wording. Pay attention to excess periods, claim notification deadlines, and referencing requirements.
Frequently asked questions
Does rent guarantee insurance cover legal costs?
Yes, most rent guarantee insurance policies include legal expenses cover for eviction proceedings, typically up to £50,000-£100,000. This covers solicitor fees, court costs, and bailiff fees. Some policies include this as standard, others offer it as an add-on.
What if the tenant was already in arrears?
Pre-existing arrears are not covered. Rent guarantee insurance only covers arrears that occur after the policy start date. Insurers require tenants to be fully up-to-date with rent when the policy begins, and most require tenant referencing to have been completed.
Can I get rent guarantee insurance for tenants on benefits?
Some insurers do cover tenants receiving housing benefit or Universal Credit, but policies may have stricter requirements or higher premiums. You may need a guarantor in place, or the tenant must pass enhanced referencing. Always check the specific policy terms.
Managing this yourself?
LandlordOS helps UK landlords stay compliant and organised:
- Automatic compliance reminders for Gas Safety, EICR, EPC
- Document storage with AI-powered certificate reading
- Tenancy tracking and rent management
LandlordOS tip
Always use the insurer's referencing service or one they approve. Using a different referencing provider can void your cover. And report arrears immediately - waiting too long is the most common reason claims are rejected.