“It feels so unjust. You own a property, you let it to someone on the promise of a fair rent, and they don’t pay up. More often than not, you will have a mortgage to pay, and the lender expects its monthly instalments. It feels like the property owner takes all the risks. Surely my insurance broker will be able to find a way to mitigate the risk of arrears with insurance.”
This is something that has become unfortunately frequent in the world of property renting; however, there are insurance policies to cover such situations. Not only will these policies mean that you will have all of your lost money replaced, but the insurance company will use the best of their ability to have the problem tenant evicted.
The popularity of this kind of insurance has grown since the dawn of the recession. People can fall behind on their rent for a huge number of reasons, whether it’s trades-people struggling to find work, professionals who’ve fallen on hard times or people claiming benefits who’ve just overspent on a given month. However, the vast majority of people don’t move into a rented property with the intention of getting into arrears, but the landlord has a right to collect rent all the same.
It is very rare for a landlord to own a property and not actually need the rent. The boom in “buy to let” mortgages has meant that many very normal people have become landlords. These people need their rental income to pay their mortgage and avoid the banks repossessing the property from them. That’s why they are willing to spend a proportion of their rental income on insurance.
With this type of insurance there are two main policy types, there is the standard insurance against lost income from tenants going into arrears, and for a premium, the insurance company will pay the rent if the tenant does not. Some companies ask for credit checks to be carried out but not all of them will, and some will not insure you if your tenants are claiming benefits, but some will.
The second aspect of an insurance policy that you should look for is the assurance that the insurance company will help you evict a tenant that can’t keep up payments over a long period. Many landlords don’t have the time or the knowledge to attend to this efficiently and effectively, but with the help of the insurance company you will be able to take care of it with no problems. If you’re a landlord you should seek advice from your insurance broker on the best insurance policy for you.
If you are a property owner and you are looking for some friendly advice on landlords insurance, you should visit Coversure, they are one of the UK’s best providers of insurance for anything from motorbikes to caravan insurance.
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