Unpaid rent insurance: all you need to know in 5 questionsJulia Jannin
Do you own a property and plan to rent it out? If this is the case, we advise you to read this article carefully, which details the main aspects of default tenant insurance and assesses the protection that this coverage can offer you as a landlord in the event of non-payment by your tenant.
What are the main guarantees of unpaid rent insurance/default tenant insurance?
This type of insurance has become an increasingly popular option for landlords, not only because it protects them in the event of non-payment of rent by the tenant, but also because it provides comprehensive defense coverage. legal related to the leased property.
- Payment of rents not paid by the tenant: 6.9, 12 or 18 months depending on the guarantee subscribed.
- Defence and protection of the landlord's interests. In the event of non-payment, the insurer claims the unpaid monthly payments from the tenant through specialised lawyers. This process is carried out before any judgement, whether it is an eviction or a conviction for non-payment. In addition, the insurance company itself manages the relevant legal procedures to obtain an eviction order or sentence for the defaulting tenant, so that the landlord can dispose of the property as soon as possible.
- Tenant's vandalism
What to do in the event of non-payment of the rent?
In the event of non-payment of rent, the insurance company must be informed as soon as possible. From that moment on, the insurance company will undertake the procedures for claiming the debt and for eviction.
How much does unpaid rent insurance cost?
The cost of unpaid rent insurance is between 3 and 5% of the annual rent. This means that, in the case of a rent of 1,000 euros per month, it would cost between 360 and 600 euros per year.
What are the conditions for taking out the policy?
In order to take out an unpaid rent insurance policy, the companies first carry out a study on the financial solvency of the tenants to whom the owner will rent the property. In the end, it is the insurer itself that will pay the rent in the event that the tenant does not fulfil his obligation.
In order to consider a potential tenant as solvent, insurers use minimum ratios to assess the tenant as suitable. These are between 40% and 45%, considering the proportion of rent to the tenant's monthly income.
In order to carry out this examination, the insurer may require a series of documents that attest to the tenant's solvency:
- Employee: 2 or 3 last salary slips are requested in order to assess the level of income as well as the employee's seniority in the company.
- Self-employed: last 2 quarterly VAT returns and the last personal income tax return.
- Pensioners: proof of their status and the amount of their annual income, by means of a bank statement or any other similar form.
In addition to this aspect determined by its various variables, the insurer also checks the future tenant against various lists of bad payers to ensure that he is not a bad payer.
Who should pay the unpaid rent insurance?
Insurance must be taken out by the owner of the property.
In case of you do not have Default tenant insurance, do not hesitate to ask us for a comparison of the best default tenant insurance here
There are many insurance companies and different contract options. For this reason, we recommend that you use the services of a specialist broker who will be able to guide you. If you have any questions, do not hesitate to contact us directly by telephone on +34 93 268 87 42 or through WhatsApp on +34 627 627 880 or by email: [email protected]
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