What’s the difference between Loss of rent and rent guarantee cover?
There’s a lot for Landlords to consider when purchasing insurance.
You have to decide whether you only need Buildings Insurance, or if you also need Landlords Contents Insurance for the furniture, white goods and homewares you've left inside your property. Then there’s considering whether to select optional covers such as Accidental Damage or Theft by Tenant.
It’s also likely that you’ll have seen the following two optional covers; Loss of Rent and Rent Guarantee. While the names are similar the financial protection they offer cover different circumstances, and as such it can be difficult to work out which is most appropriate for you.
Thankfully at Direct Line for Business we’re here to help make getting specialist landlords insurance easy. We’ve summarised what these two elements of cover offer, and why you may choose to pay an additional premium to add them to your insurance.
Loss of Rent
For many Residential or Commercial landlords the rental income you generate from your properties can often make up a large proportion of your usual income. This means that making sure money keeps coming in is very important.
Unfortunately there are many ways in which cash flow can be stemmed. For instance, if a fire made the premises uninhabitable or it was damaged in a storm or flood, your tenants may be forced to move themselves or their business elsewhere, at least temporarily.
However, our optional Loss of Rent Insurance can help cover you in such a situation. If it is not possible for you to rent the premises because the property is uninhabitable due to an insured incident (for example a fire) then you can make a claim for the shortfall in the rental income (subject to conditions).
Loss of Rent T&Cs – Cover applies when damage occurs to Buildings or Contents (depending on which cover was selected) due to an insured peril.
No matter how carefully you vet your tenants, problems with unpaid rent can still happen. If you’re a Residential landlord and your tenants stop paying rent then you may need to evict them, while at the same time keeping up with your monthly mortgage payments.
To help take away the stress of rent arrears, our optional Rent Guarantee Insurance pays the unpaid rent while your tenants or ex-tenants are still in your property. You can make a claim if you have served your tenants with an eviction notice and the rent has been overdue for at least one calendar month. There is no limit to the number of claims you make per year.
As a new customer or at renewal, all you need to do is take out our optional Legal Expenses cover and add Rent Guarantee to it. You’ll also be covered for the costs of repossessing the property.
Once you get your property back, you may find it needs repairs for it to be let out again. The cover will pay 50% of the rent you had previously received whilst letting it out while the repairs are happening for up to three months, or until the property is let, whichever happens first.
Rent Guarantee T&Cs - Cover purchased as part of Legal Expenses add-on. Qualifying criteria apply. Tenancy agreement must begin or be renewed after policy start date to claim in the first 90 days in first year. Cover only applies to properties in England, Wales, Scotland and Northern Ireland. Cover excludes properties on the Isle of Man or Channel Islands. Residential landlords only.
So which optional cover do I need?
If you’re a Residential or Commercial Landlord, and you’re worried about the financial impact of lost rental income following an insured event, then consider taking out our optional Loss of Rent cover.
If you’re a Residential Landlord, and you’re worried about tenants or ex-tenants not paying rent, then consider taking out our optional Rent Guarantee cover.
For any sections or elements of cover provided, policy terms and conditions will apply. Full details can be found in the policy wording so take a look at exactly what our Landlord Insurance and Commercial Landlord Insurance policies have to offer, including Buildings Insurance, Landlords Contents Insurance and Public Liability (also referred to as property owners liability) as standard. Direct Line for Business also offers Loss of Rent, Rent Guarantee, and Employers' Liability as optional covers subject to an additional premium.