Rent Guarantee new reference condition?

by Readers Question

9:38 AM, 13th July 2020
About 3 weeks ago

Rent Guarantee new reference condition?

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Rent Guarantee new reference condition?

Hi, I would be interested in views on the following: I received renewal Legal & Rent Guarantee Insurance documents from Rentguard (which initially I purchased through Openrent)

There is the following condition in their ‘statement of fact’: “The responsibility lies with the landlord to make sure that if Tenants’ circumstances have changed from those provided at the start of the Tenancy Agreemant and when the initial Tenant Referencing was completed, or there was a breach of tenancy agreement by the Tenant, then the Insured must complete a new reference on the Tenants”

How can I know about their circumstances and be responsible for knowing this?
What is the mechanism of making sure that ‘Tenants’ circumstances have changed’ ?
Why on earth they would allow me to reference them if they are already in the property?

What is the point in such insurance? Insurance should mitigate the risk of tenants default. In this case the tenants are already in the property.

If referencing shows they cannot pay rent, I will not get the insurance.
If referencing shows they still can pay rent, I do not need the insurance or effective period of risk will be much less than a year.
Also re-referencing tenants & guarantors doubles the insurance price for me.
Basically, I mitigate risk of less than a year for a double price and this strange ‘condition’ would allow the Insurer always to escape from paying me

They also charge me for the future policy amendment and mid-term adjustment!! Why?

They offer renewal but it they cannot evict tenants, in the case of claim they will not pay rent guarantee

In current situation, I cannot buy a rent guarantee from another insurer (nobody offers it to new customers).
What would you do – go with this renewal just in case? or accept having no rent insurance guarantee?

Thank you

Olga



Comments

Luke P

10:28 AM, 13th July 2020
About 3 weeks ago

Name. Shame. Avoid.

VikkiBaptie

11:37 AM, 13th July 2020
About 3 weeks ago

We’ve found all rent guarantee insurance not to be worth the paper it’s written on. Save a percentage of your rent each month to cover voids and get an excellent system to keep on top of rental payments. Positive reinforcement is good. Our tenants have always paid on time but if you’re having trouble get in touch as soon as you can. Also prompting employed tenants to take income protection insurance is a good idea. Hope that helps x

Rob Crawford

12:14 PM, 13th July 2020
About 3 weeks ago

Firstly well done in reading the small print! I would suggest you find a new rent guarantee scheme. There will be updates to the T&C's of most schemes following covid and I suspect premiums will increase for those that don't mitigate risk via trip up clauses such as this.

Puzzler

10:21 AM, 18th July 2020
About 3 weeks ago

This will be due to CV19. It means if your tenants lose their job the insurance won't cover you. Which as you say makes it pointless.


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