What Is Loss Of Rent Insurance For Landlords?
Loss of rent insurance reimburses your rental income when your property is uninhabitable following an insured event such as fire, flood, or major structural damage. It is typically an add-on to your landlord buildings insurance and covers your income while repairs are carried out, usually for 12 to 24 months.
Loss of rent cover is different from rent guarantee insurance, which pays out when a tenant defaults on rent. They protect your income in different circumstances, and many landlords need both.
Below we explain how each one works, what they cost, and who should consider them as part of a wider landlord insurance policy.
Loss of rent covers your income when the property is uninhabitable after an insured event like a fire or flood. It does not cover a tenant who simply stops paying, which is what rent guarantee insurance is for, and landlords regularly confuse the two. Bundling loss of rent with your buildings policy is usually cheaper than buying it standalone.
Compare landlord insurance quotes with loss of rent cover included.
How does loss of rent cover work?
Loss of rent cover activates when an insured peril makes your property uninhabitable and tenants cannot occupy it. The insurer pays your agreed rental income during the repair period, up to the policy limit.
The claims process
An insured event damages the property, for example a fire that destroys the kitchen. You submit a claim through your buildings insurance, and the insurer assesses the damage and arranges repairs.
Loss of rent cover then reimburses your rental income from the date the property becomes uninhabitable until repairs finish or the cover period expires. The cover period is typically 12 to 24 months.
Getting the cover period right
If repairs take longer than the cover period, payments stop even if the property is still empty. Factor in realistic timescales for your type of property when choosing your cover period.
A flood-damaged ground-floor flat may take six months to dry out before rebuilding even starts. If you own a property in a flood-risk area, opt for 24 months of cover rather than 12.
What is the difference between loss of rent and rent guarantee insurance?
Loss of rent covers income lost when the property is physically uninhabitable after an insured event. Rent guarantee insurance covers income lost when a tenant stops paying rent while the property is still liveable.
Side-by-side comparison
| Feature | Loss of rent cover | Rent guarantee insurance |
| Trigger | Insured peril (fire, flood, storm) | Tenant stops paying rent |
| Property condition | Uninhabitable | Habitable |
| Typical cover period | 12–24 months | 6–12 months |
| Typical annual cost | £100–£300 | £100–£300 |
| Usually included in | Buildings insurance add-on | Standalone or legal expenses add-on |
| Tenant referencing required? | No | Yes (credit, employment, landlord check) |
| Covers legal costs? | No | Yes (eviction notices, court fees, bailiffs) |
Many landlords need both. These are separate risks that a combined landlord policy can cover together.
What does rent guarantee insurance cover?
Rent guarantee insurance pays your rental income when a tenant defaults on rent. Most policies also cover the legal costs of evicting the tenant, which can run to £2,000–£5,000 or more.
Cover and conditions
The policy reimburses rent from the date the tenant stops paying, usually after a waiting period of one to two months. Most policies cover eviction costs including serving notices, court fees, and bailiff charges.
Cover periods are typically 6 to 12 months. Some policies extend to 15 or 18 months, but this is less common.
Tenant referencing requirements
Most rent guarantee policies require full tenant referencing as a condition of cover. If you skip the credit check, employment verification, or previous landlord reference, the insurer can reject your claim entirely, whether it is a standard let or an HMO.
Court backlogs can mean evictions take 6 to 12 months. If you own a buy-to-let with a mortgage to service, rent guarantee cover fills the gap while you wait for possession.
Who needs loss of rent and rent guarantee cover?
If you rely on rental income to cover a mortgage or other financial commitments, both types of cover are worth considering. The cost of a void period or a non-paying tenant can quickly exceed the annual premium.
Landlords who benefit most
Mortgaged landlords face the greatest risk. You must keep paying the lender even if the property is empty or the tenant stops paying, so buy-to-let insurance with loss of rent cover protects your ability to service the loan.
Single-property landlords have no other rental income to fall back on. If you manage multiple properties or a block of flats, the financial impact of one void is diluted, but a single-property portfolio has no buffer at all.
High-value lets carry the biggest exposure. The higher the monthly rent, the greater the loss if the property sits unoccupied or the tenant stops paying.
What is not covered?
Neither loss of rent nor rent guarantee policies cover every scenario. Understanding the exclusions helps you avoid surprises when you need to claim.
Common exclusions
Void periods by choice are excluded. If your property is empty because you are refurbishing it or have chosen not to let it, neither policy pays out.
Damage caused by poor maintenance is also excluded. If the property is uninhabitable because of your failure to maintain it, loss of rent cover will not apply.
Our guide to what factors affect landlord insurance costs explains how property condition influences both your premium and your ability to claim.
Inadequate tenant referencing voids rent guarantee claims. Pre-existing arrears before the policy start date are also excluded, as are council tax and utility costs during the void.
Tax treatment
Both loss of rent and rent guarantee premiums are fully tax-deductible against rental income. HMRC treats insurance as an allowable property expense, so keep your premium receipts for your self-assessment return.
If you want to reduce the overall cost of your landlord insurance, bundling loss of rent cover with your buildings policy is usually cheaper than buying it standalone.
Frequently Asked Questions (FAQs)
Loss of rent cover as an add-on to buildings insurance typically costs £100 to £300 per year, depending on the monthly rent and cover period. Rent guarantee insurance costs a similar amount, and both are tax-deductible against rental income.
Not in practice, as they cover different scenarios. Loss of rent applies when the property is uninhabitable, while rent guarantee applies when it is habitable but the tenant is not paying.
Some buy-to-let lenders require loss of rent cover as a condition of the loan, but not all do. Check your mortgage terms, as it is strongly recommended even if not mandated.
Payments stop when the cover period expires, even if the property is still uninhabitable or the tenant is still in arrears. For rent guarantee, 12 months is a sensible minimum given current court processing times.
No, standard rent guarantee insurance covers assured shorthold tenancies, not holiday lets or short-term rentals. Holiday let owners need specialist home insurance cover that addresses booking cancellations and seasonal income variations.