Discover the importance of taking out a rent default insurance policy

As the owner of a rental property or a future landlord, it is completely natural that you want to ensure your tenants’ compliance with their payments.

Fortunately, there is a solution to guarantee your income and avoid inconveniences. What is it? Taking out renter’s default insurance.

What is a rent default insurance?

Rent default insurance is a policy specifically designed to protect landlords against non-payment of rent for their rented property or premises. These policies guarantee the collection of monthly payments, even if the tenant fails to meet his obligations.

What does non-payment of rent insurance cover? 

The market offers a wide variety of non-payment of rent insurance policies, with different coverages and prices that normally include:

• Defense and claim of the lease and other rights of the property 

In case the tenant does not pay the rent, it is only necessary to inform the insurer to initiate the immediate eviction process.

• Damage to the property and its contents 

If upon repossession of the property – either by eviction or by agreement – damage or theft of property is found, this insurance covers up to €3,000 at new value, with an excess of €300 for vandalism. Included are:

1. Theft.
2. Deterioration.
3. Damage to the property.
4. Acts of vandalism to the contents mentioned in the lease contract. 

• Non-payment of rent

The main advantage of this insurance is that it guarantees the payment of the monthly payments owed by the tenant, depending on the number of months contracted, which can be 6, 9 or 12.

The state average for recovering a home in case of non-payments and evictions is 9 months, so a minimum coverage of this period is recommended, the most common being 12 months.

• Benefit for unpaid utilities 

The policy covers, up to the established limit, the lesser amount between the outstanding debt of water, electricity or gas supplies by the tenant, the change of ownership of the supply contracts and the registration of new agreements. 

• Cost of locking due to claiming unpaid debts

Once the property has been repossessed, this insurance covers the cost of changing the lock, according to the established conditions.

• Lock cost due to eviction 

If the case is resolved by eviction, the policy covers the material and labor costs of the lock change.

Why is it important to take out non-payment of rent insurance? 

Taking out non-payment of rent insurance is essential to protect both your income and your property. These are its main benefits:

1. Access to legal assistance.
2. Protection against vandalism.
3. Guarantee of the maintenance of the property.
4. Guaranteed rent collection regardless of the circumstances.
5. Management of the judicial process of eviction, assuming its costs.

Our insurance service for the real estate sector

In KM2 Real Estate Services, with agencies in Barcelona and Madrid, we are experts in advising, recommending and contracting insurance.

We process the scope of coverage and manage them always for the benefit of our clients. 

Do not hesitate to contact one of our agents for advice on which insurance is the most suitable according to your needs, we want to help you!