How do I find the best rent protection insurance deals?
With rising living costs leading to increased rental defaults, landlords are seeking peace of mind through rent protection insurance. This handy guide explains how rent protection insurance works, typical costs, and how to bag the best deals through direct insurers, brokers, and price comparison websites.
As a landlord, one of the biggest concerns can be ensuring that your tenants pay their rent consistently and that they don’t fall into arrears. With the recent surge in interest rates, the knock-on effect on mortgage rates has meant that missed rent payments can dramatically affect your financial situation now more than ever. Regardless of whether you receive your monthly rent payments, the mortgage has to be paid, so tenants defaulting on rent can result in landlords not being able to pay the monthly mortgage. Not good.
This is a prime example of how rent protection insurance can offer you peace of mind. It guarantees that if a tenant is unable to pay their rent, the landlord will be covered.
What is rent protection insurance?
Rent protection insurance, also known as rent guarantee insurance, is a policy which can be taken out to ensure that you receive rental income in the event your tenant is unable to pay the rent. There are many reasons a tenant may be unable to pay their rent. For example, they may be temporarily unable to work due to an injury, or they could have lost their job.
Even the best of tenants can face financial difficulties, and especially in the current economic climate amidst the cost of living crisis, rent protection insurance can offer great peace of mind to landlords.
A rent protection policy is normally taken out for the period in which you are letting your property out for. This is typically either on a 6-month or 12-month basis. In the case of longer tenancies, landlords will often renew their policy after an initial 12-month period accordingly.
What is the typical cost?
The cost of a rent protection policy will vary depending on several factors such as the type of property, how many tenants live in the property, and how much rent coverage you would need based on the level of rental income. Your excess level and whether you require add-ons such as legal cover will also affect the price of the policy. There are also various levels to rental policies so a basic policy would naturally cost less than a fully comprehensive policy.
A typical rent protection policy could cost around £85-£120, again depending on the level of cover you choose.
How do I find the best deals?
In the past, choice has been quite limited for landlords. However, with the rise of price comparison websites, it’s possible to access many deals and compare them against each other to see what would be the best option for your individual needs.
But this doesn’t mean that only the best deals are available via price comparison websites, as there are several large insurers who are not on comparison websites and can offer competitive policies. Let’s take a look at some of the ways you can find the best rent protection insurance deals.
Dealing directly with an insurance company
Even in today’s competitive market, many insurance companies are not tied up with price comparison websites. Therefore, it’s definitely worth speaking directly to several insurance companies to see what they may have to offer. You may find that they offer even cheaper policies than you’d find on price comparison websites.
Using an insurance broker
One of the traditional methods of finding the best insurance deals, using a well-established broker, can often be an effective way of getting a great rent protection policy at a competitive price. Brokers have an extensive network and have built relationships with insurance providers, and can often give their clients access to deals not available when going to the insurance provider directly. So, it’s definitely worth speaking to a trusted insurance broker and letting them know of your requirements to see what they might have to offer.
Price comparison websites
Price comparison websites can be a good way to quickly and effectively see what a typical policy could cost you, as well as compare factors such as what the typical excess would be. They can also help identify if extras like legal protection are included as standard, and if not, how much more they’d cost, helping you to get a better idea.
Summary
With the UK facing a cost of living crisis and economic uncertainty, it’s no surprise that an increasing amount of tenants may find paying their rent and bills difficult, which can have a knock-on effect on landlords. For landlords, there can be more serious repercussions, as being unable to pay the monthly mortgage due to not receiving rent for the month can mean late payment charges and a negatively affected credit score. In more serious cases, repeatedly falling behind in mortgage payments can result in the property being repossessed.
A rent protection policy can be an excellent way of providing financial cover in the event tenants can’t pay their rent. And as we’ve seen, there are several options when it comes to finding the best possible deals. It’s worth noting that while price comparison websites are extremely popular, you might be surprised at how the “old-fashioned” ways of buying a policy - such as using a broker or dealing directly with an insurance company - can help you find a great policy at a competitive price that offers everything you need.