Seguros y pensiones para todos

Renting your home: say goodbye to unpleasant surprises

Renting your home: say goodbye to unpleasant surprises

Home > Blog > Renting your home: say goodbye to unpleasant surprises

03.May.2020

If you're thinking of renting your home but you're afraid of defaulting tenants, we propose some tools to protect you.

What happens when the tenant of a house stops paying the rent to the owner? Obviously this represents a serious economic loss, but it is also an unpleasant situation that causes a lot of stress, wasted time and worry. In fact, along with potential material damages, this is the main reason that makes homeowners think twice about renting a property.

Insurance against uncertainty

As is already the case in many other everyday situations that worry us, the insurance world has managed to come up with a response to this concern: the formula is called “rental protection insurance” or “unpaid rent insurance”. It is a very effective tool that is also changing the traditional mechanisms that owners used to use to protect themselves against defaults.

The usual thing was for property owners to ask potential tenants for personal guarantees or bank guarantees. However, this system is very expensive and not always easy for the tenant to obtain, even if they are completely solvent. Therefore, rental protection insurance is replacing bank guarantees to provide an additional guarantee to the cash deposit stipulated by the Spanish Rent Act.

Non-payment and damages

In this way, if the tenant defaults or causes damage to the home, the insurance company will cover these amounts according to the amount of unpaid monthly payments stipulated in the policy and any intentional damages that may have been caused.

Choosing the ideal tenant

In order to offer this service, insurance companies establish several general requirements: firstly, the tenant must prove – by providing the relevant documentation – that they are not registered in any database of debtors; they must also provide proof of economic solvency and that the annual rent does not exceed 40-45 percent of their net annual income. This also benefits the property owner, since the insurance company helps to make the optimal selection of the potential tenant of their property.

In addition, this type of insurance also usually offers coverage associated with the defense and protection of the owner’s interests (disputes arising from the contract and evictions), and any type of urgent home repair.

You may also like…

It is now possible to insure your cryptocurrency investment

It is now possible to insure your cryptocurrency investment

Volatile currency But why is this type of currency riskier? Firstly, because these currencies are particularly volatile and there is a high level of speculation in the market where they operate. This means that the people who invest in them can potentially make a lot...

Insurtech: from a trend to a booming reality

Insurtech: from a trend to a booming reality

Predicting risk All these technologies have generated a huge and continuous stream of connections and information that allows insurance companies to analyze our parameters related to health, driving, travel, home maintenance, and so on. Thanks to the predictive...

Children and money: should they get an allowance?

Children and money: should they get an allowance?

And it is normal to worry about this. Some people want to wait until their children are older to teach them everything to do with money, others believe that these skills related to their financial intelligence should be enhanced from an early age and, of course, there...

Does home insurance cover solar panels?

Does home insurance cover solar panels?

Buildings or contents insurance? But do you know whether these photovoltaic installations are covered by your home insurance? If the solar panels are fixed, they are considered permanent electrical energy installations and, for this reason, they fall within your...

What is cashback and how to take advantage of it?

What is cashback and how to take advantage of it?

In this article we explain what cashback actually is and how to benefit from it without falling into the trap. What is cashback? We can define cashback as a system through which you are paid a percentage of the money you spend when you buy certain products. In other...