In the world of rental properties, rental default insurance is basically your best ally for protecting your investment and your cash flow. Imagine if the tenant stops paying—it's not just annoying, it's a serious problem for your accounts. That's what this insurance is for: it covers your back and keeps your business running.
What exactly does it cover?
First, if the tenant is late or simply stops paying, the insurer is responsible for paying the outstanding rent (usually starting from the second month of nonpayment). Of course, there are limits: generally up to 12 months' rent.
Then there's the legal part, which can become a real headache. The insurance policy includes legal defense, management of the legal process, and even the costs of lawyers and paperwork if you have to go through with eviction. This way, you can focus on your business, not on endless lawsuits.
If the tenant also leaves the property in poor condition—beyond what is normal due to use—some policies also cover these damages. This way, you avoid unexpected losses at the end of the contract.
Not only that: there are additional services such as tenant credit reports before signing the contract, which help filter the most reliable candidates. They also offer legal advice to resolve any contractual issues. All designed to help you make informed decisions and minimize risks.
Why take it out? Basically, for financial peace of mind: you ensure payment, even if the tenant defaults. In addition, professional insurance management saves you time and resources. And if you choose a policy that requires solvent tenants, the risk level is lower from the outset.
The cost? It's usually between 3% and 5% of the annual rent. For example, for a rent of €800 per month, insurance can cost between €288 and €480 per year. It's a reasonable expense when compared to the value of maintaining a stable income and avoiding legal issues.
In short, for owners who want to professionalize the management of their assets and avoid unpleasant surprises, rent default insurance is an investment that provides security, saves time, and protects against unforeseen events.