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What does legal protection and rent guarantee insurance cover?

Rent arrears are the bane of every landlord’s life – they eat away at your income, and the cost of recovering those arrears is expensive both in terms of the legal expenses likely to be involved in any eviction and the time you spend in pursuing such action.

Legal protection and rent guarantee insurance cover is designed to safeguard you against such losses in two main ways – just as the description suggests, by providing cover for the legal expenses involved attempting to recover rental arrears when evicting tenants and compensation for any lost rental income:

Legal protection

  • when you have tried everything in your powers to persuade your tenant to come to some sort of arrangement over his or her rent arrears – by agreeing a payment plan, for example, by paying any housing benefit they may receive directly to you, or by calling in guarantor upon whom the tenant may have relied – legal action may be necessary;
  • if you have reached the end of the fixed term of an assured shorthold tenancy (the most common form of tenancy agreement), you may issue a section 8 notice for repossession of the let property without giving any reason;
  • at any other time, you may issue a section 21 notice to the tenant to quit, but only for those reasons set out in tenancy legislation, which include arrears of rent and anti-social behaviour;
  • a section 8 or a section 21 notice to quit, however, is designed to secure your possession of the property and not necessarily any recovery of rental arrears – although these may be awarded (but might not be) during any court hearing of your section 21 notice;
  • at Cover4LetProperty, our landlords legal protection insurance covers the expenses and costs involved in pursuing any civil dispute with your tenant or defending any claim that may have been made against you as the landlord – in other words, in covers much more than just notices to quit, evictions or attempts to recover rental arrears;
  • the cover provides up to £50,000 of such legal costs and expenses, including up to £100 a day for lost wages when you or any witness need to attend court;
  • the cover extends to long-term tenancy agreements and to the minimum six-month agreements;

Rent guarantee insurance

  • alternatively, you might instead want the additional protection afforded by one of our rent guarantee insurance policies – which also include landlords legal protection cover;
  • rent guarantee insurance covers any loss of rent you may have suffered, up to £1,500 a month, for a maximum of six months or until you have secured vacant possession of your let property (whichever is the sooner);
  • the cover also provides up to a total of £50,000 in legal costs and expenses involved in the eviction of a tenant, in accordance with the relevant tenancy legislation;
  • these legal costs and expenses include up to £100 a day for any witness or defendant who has had to lose wages or their salary by taking time off work to attend a tribunal or court hearing in connection with your attempts to recover arrears of rent;
  • our rent guarantee insurance may be arranged for any type of tenant you may have – professional, employed, self-employed, unemployed, benefits claimants or others;
  • the cover may apply whether you have entered into a long-term tenancy agreement with your tenants or have just the minimum six-month tenancy agreement;
  • since we maintain our helpline 24/7, you may rest assured that help is just a telephone call away whenever you need it;

Your responsibility

  • not unreasonably, our rent guarantee insurance also relies upon your having taken every reasonable precaution in the selection of tenants to avoid arrears of rent in the first place;
  • it is a condition of the insurance policy, therefore, that you secure one approved credit reference agency report and at least one adequate character reference in writing for each of your tenants – as our recent press release discusses, failure to do so will render any claim invalid and it is this misunderstanding that gives rent guarantee insurance a bad reputation.

Make sure you build in the necessary steps each time you take on a new tenant so your rent guarantee insurance will pay out in the event it needs to;

  • the excess incorporated into our rent guarantee insurance is the equivalent in value to one month’s rent on each claim you make under your policy.

Rent arrears pose a huge headache for any landlord – not only is there a loss of rental income, but also the likely cost of expensive legal fees and charges as you pursue notices to quit, seek an eviction and attempt to recover the arrears of rent.

Landlords legal protection and rent guarantee insurance are clearly closely linked and that is why our combined policy provides you the protection against all the legal expenses you may encounter and compensation for any rental income you may have lost.

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