Rent Guarantee Insurance – Should I Renew?
Rent Guarantee Insurance – should I Renew?
After reading this blog today about more and more landlords taking out rent guarantee insurance to protect themselves against non-paying tenants, I am surprised to see how many landlords are not renewing their RGI after the first year.
When we call landlords the reasons they give for this non renewal vary from:
‘The Tenant Seems OK’ Scenario:
‘The tenants have paid on time for a year, so we don’t need insurance as they are OK.’ This outlook on the future as a tenant’s ability to pay forever is totally blinkered. Every person on this planet has had a problem in life at one time or another and we never know when or where it will happen. Not Insuring your Rent & Legal Expenses because a tenant has paid on time for any period is exactly the same as not insuring your property because the tenant has not burnt it down yet …!
Letting to Friends & Family Scenario:
Another reason landlords give for not renewing is: ‘We don’t need insurance now because we rent to family or friends.’ No you won’t be OK, ask yourself: has your family or friends never had a problem, and do you want their next financial problem to become yours? If any family member or friend stops paying the rent for any unforeseen problem it means that problem invariably breaks up friendships or family and their problem then becomes yours. In this scenario it is imperative to insure, because if things turn problematic you still get the insurance to cover the rent and this can work in your favour.
Insurance is about covering you for unforeseen events and it should never be assumed that just because those events have not happened they never will – that is called gambling. Our advice at Rent SafeUK.co.uk is never gamble with your income, investments and pension and to not to continue to insure your rent year on year means you are gambling with our future.
The best evaluation of whether you need insurance is to assess that if the rent is not paid, the property is damaged and you need to pay out of your own pocket to evict the tenant, with a possible loss of £10,000 – would that have an effect on your lifestyle and income? If the answer is yes then to pay £100 a year (just £1.93 a week) to insure against all those losses is a pretty good bet.
There is no good reason to not renew a policy and just because something has not happened yet does not mean it will not happen in the future. That is why every year we insure our cars, homes, health, pets, etc – so please renew your policies, because we are seeing more tenants falling into problems on year two and three and the landlords are not insured.