What Is Rent Guarantee Insurance And Is It Worth It?
Rent guarantee insurance pays your rent if your tenant stops paying. It typically costs £150 to £300 per year and covers 6 to 12 months of lost rental income, plus the legal costs of evicting the tenant.
Tenant default is one of the biggest financial risks landlords face. A single non-paying tenant can cost thousands in lost rent and legal fees, and court backlogs mean evictions can take 6 to 12 months.
Rent guarantee insurance transfers most of that risk to an insurer for a relatively modest premium. Below we explain what it covers, what it costs, and whether it makes financial sense as part of your landlord insurance package.
Rent guarantee pays your rent when a tenant stops paying, typically costing £150 to £300 a year for 6 to 12 months of cover plus eviction legal costs. Nearly every policy depends on the tenant having passed referencing, so skipping that step is the fastest way to invalidate it. Treat buildings cover, loss of rent and rent guarantee as three separate layers rather than one.
Compare rent guarantee insurance quotes before your next tenancy starts.
What does rent guarantee insurance cover?
Rent guarantee insurance covers lost rental income when your tenant defaults on their rent. Most policies also cover the legal costs of evicting the tenant, including court fees and solicitor costs.
Standard cover
The insurer pays your monthly rent (up to the policy limit, typically around £2,500 per month) for the duration of the claim, usually up to 6 or 12 months. Legal and eviction costs are covered on most policies, often up to £50,000 or £100,000.
Some policies also include tenant tracing if the tenant absconds without notice, and replacement tenant referencing capped at £200 to £500.
Coverage limits to check
Always check both the monthly limit and the maximum claim period before buying. Some policies cap total rent arrears per claim at a set figure, while others cap it by months.
Our guide to what landlord insurance covers explains where rent guarantee fits within a wider policy.
How much does rent guarantee insurance cost?
Rent guarantee insurance typically costs £150 to £300 per year for a standard residential let. Some providers charge a flat monthly fee of around £10 to £15, while others base the premium on a percentage of your annual rent.
What affects the premium?
The premium is influenced by the property location, tenant risk profile, cover level, excess amount, and your claims history. Our guide to what factors affect landlord insurance costs breaks down how each of these drives your price.
Premiums are fully tax-deductible against your rental income. HMRC treats insurance as an allowable property expense, so keep your premium receipts for your self-assessment return.
The cost of not insuring
If your property rents at £1,000 per month and your tenant defaults for six months, you lose £6,000 in rent plus £2,000 to £5,000 in legal costs. A £200 annual premium is a small price for that level of protection.
How does a rent guarantee claim work?
When your tenant stops paying, you notify your insurer and provide evidence of the default. After a waiting period of typically one to two months, the insurer assesses your claim and begins paying your rent.
Step by step
| Step | What happens | Your action |
| 1. Tenant misses payment | Note the date and keep a record | Send a formal written reminder |
| 2. Notify insurer | Contact your insurer or broker | Do this as soon as the tenant defaults |
| 3. Provide evidence | Bank statements, tenancy agreement, arrears letters | Submit within the policy’s notification window |
| 4. Waiting period | Usually 1–2 months of arrears | Do not accept partial payments without insurer consent |
| 5. Claim approved | Insurer pays your rent minus excess | Insurer manages the legal process if eviction is needed |
Do not accept partial payments or agree to informal repayment arrangements without consulting your insurer. If you own a buy-to-let with a mortgage to service, follow the insurer’s process exactly, as accepting reduced rent can void your claim.
What is not covered?
Rent guarantee policies exclude arrears that accrued before the policy started, rent disputes over property condition, and situations where proper legal procedures have not been followed.
Key exclusions
Pre-existing arrears are excluded; the policy only covers defaults that occur during the policy term. If your tenant withholds rent because of a dispute about repairs, most policies will not pay out until the dispute is resolved.
Waived or reduced rent is also excluded. If you agree to accept lower rent or write off arrears informally, the insurer will not cover the difference.
Tenant referencing requirements
Most policies require the tenant to have passed a full referencing check covering credit history, employment verification, and previous landlord references. If the tenant was not properly referenced, the insurer can refuse the claim entirely.
Holiday lets and short-term rentals are excluded from standard rent guarantee policies. These are designed for assured shorthold tenancies only, so HMO and block of flats landlords should check that their policy covers multi-tenant properties.
Is rent guarantee insurance worth it?
Rent guarantee insurance is worth it if your rental income covers your mortgage or living expenses, you have limited cash reserves, or you want to avoid the cost and stress of chasing non-paying tenants through the courts.
Who benefits most?
Mortgaged landlords face the greatest exposure. You must keep paying the lender even if the tenant stops paying, and a buy-to-let mortgage with no rental income coming in can quickly become unmanageable.
Single-property landlords have no other rental income to absorb the loss. Whether you let a single property or manage multiple properties, the size of your portfolio determines how much buffer you have.
Properties in areas with longer court processing times benefit most. If eviction takes 12 months, rent guarantee cover pays you throughout.
If you want to reduce the overall cost of your insurance, our guide to cheaper landlord insurance explains how to bundle cover effectively.
How does rent guarantee compare to other protection?
Rent guarantee insurance is one of several ways to protect against tenant default. Other options include guarantors, larger deposits within the legal cap, and building cash reserves.
Layering your protection
The deposit cap under the Tenant Fees Act 2019 is five weeks’ rent for annual rents below £50,000, or six weeks for rents of £50,000 or above. That cap limits how much protection a deposit alone provides.
Many landlords combine methods: a properly referenced tenant, a guarantor where possible, the maximum permitted deposit, and rent guarantee insurance. Together these provide multiple layers of protection.
Rent guarantee insurance is separate from loss of rent insurance, which covers income lost when the property is uninhabitable or unoccupied after an insured event like fire or flood.
It is also different from standard home insurance, which does not cover tenant default at all. You may need buildings insurance, loss of rent cover, and rent guarantee insurance as three separate layers of protection.
Frequently Asked Questions (FAQs)
No, most policies exclude claims where the tenant is withholding rent because of a dispute over the property’s condition or repairs. You need to resolve the dispute before the insurer will consider the claim.
The excess is usually one month’s rent or a fixed amount of £250 to £750. A higher excess reduces your premium but increases your out-of-pocket cost per claim.
Yes, most policies require the tenant to have passed a full referencing check including credit history, employment verification, and previous landlord references. Skipping referencing can void your cover entirely.
No, they protect against different risks. Rent guarantee covers lost rent when a tenant defaults, while loss of rent insurance covers lost income when the property is uninhabitable after fire or flood.
Yes, the full cost of your rent guarantee premium is deductible against rental income. HMRC treats it as an allowable property expense, so keep your receipts for your self-assessment return.