In the last two years, evictions due to non-payment of rent have become a concern for landlords in Spain. There are numerous cases of tenants who, for different reasons, stop paying their rent to landlords but continue to live in the property.
For this reason, more and more owners are choosing to take out rent non-payment insurance. These insurances cover the monthly payments that the tenant does not pay during the eviction process and many other benefits that vary from one insurer to another. Let’s see how this type of insurance can help homeowners in this situation and how to choose the best insurance:
Non-payment insurance covers certain situations and offers multiple advantages to owners. Let's see the most common:
Total coverage against non-payments. Protects the owner against the risk of non-payment of rent. The policy usually establishes a certain period of covered income that guarantees the collection of rent during the months that are necessary to evict a tenant by judicial means.
Collection management service. An insurance can also offer the collection management of the monthly rental payments. In this way, the owner can forget about being aware of the collections and claiming delays from the tenant.
Coverage for property damage. In some cases, insurance for non-payment of rent can also compensate the owner for damage and damage to the property. Thus, if the delinquent tenant deliberately mistreats the apartment during the eviction process, the insurance may cover all or part of the repairs.
Supply and eviction expenses. Some non-payment insurances also cover the costs of electricity and water supplies on behalf of the tenant when he stops paying them. In addition, others include the management of actions and eviction costs to repossess the property.
As we have mentioned, non-payment insurance coverage can vary greatly from one company to another, however, there are a number of aspects that should be taken into account when hiring it:
Franchise. It is advisable to find out if the insurance has a franchise, since if so, you will have to pay an amount each time an accident occurs. In this sense, some companies impose a 1-month excess in their conditions and subtract what is equivalent to one month's rent from the compensation received by the policyholder.
Extra coverage. Something important to assess is what extra coverage the insurance offers: for acts of vandalism, management of eviction actions, legal advice, management and advance payment, etc.
Guarantees payment from the beginning. Another aspect to take into account is whether the insurance guarantees the collection of the rent from the first non-payment and whether the payments are made on time, without delays. In some cases, until the procedure enters the judicial process, the insurer does not disburse anything.
Finally, you have to make sure and get good information about the insurer to avoid taking out false insurance. It is important to find out if the company really has the resources to compensate the policyholder in case of non-payment of rent.
In order to know if the insurance company is reliable, it is advisable to investigate if the insurer is registered in the registry of the General Directorate of Insurance and Pension Funds. If they appear on this list, it means that the insurance company is solvent.
