Take out non-payment insurance if you are in one of these situations

Renting a home has a series of risks that cannot be ignored, and that also worry the owners, especially with default and occupancy rates, gradually increasing as it is happening.

NewsEditor
NewsEditor
08 December 2022 Thursday 06:39
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Take out non-payment insurance if you are in one of these situations

Renting a home has a series of risks that cannot be ignored, and that also worry the owners, especially with default and occupancy rates, gradually increasing as it is happening. For this reason, non-payment insurance becomes an ally to take into account in various situations. For all these reasons, it is necessary to analyze what this type of insurance protects us from and in what cases it is advisable to have one of them.

This type of insurance offers various and interesting coverages to owners who want to put their home on the rental market. The most obvious protection is against default itself. And it is that these insurances take charge of the unpaid rents by the tenants up to a maximum of monthly payments, which will be determined in the policy. Although, this is the main point of coverage, it is not the only one.

The second point is legal coverage. And it is that, the insurance company will be in charge of claiming the unpaid rent from the tenant, carrying out the legal process. At the same time, the necessary procedures in case of occupancy or having to process an eviction are also in their hands and, finally, they are also responsible – up to a pre-set limit – for any damage that the tenants may cause in the property.

The truth is that it is an interesting option if we are going to put our home for rent in almost all situations. But, in some cases it is more advisable than in others. Thus, if we cannot carry out a financial study of the tenants due to lack of training or lack of time, it is interesting to have insurance of this type. But, not only in this case, also in the following situations:

These are the main situations in which default insurance could be interesting. However, there are others where it might make less sense. If the property is rented to someone you trust, such as a friend, family member or close acquaintance, it may be less attractive. At the same time, if we are professionally dedicated to property management and our time is used for it, it does not make much sense either. On the other hand, if we are able to carry out a prior financial study properly and we see that they are solvent tenants, it could also make less sense to contract this type of policy.

These questions arise on their own after having read the coverage of these insurances and in the cases that it makes sense to hire them. Starting with the requirements, it should be noted that the insurance company first carries out an analysis of the financial situation of the tenants. All of them have different scales to measure whether they are pensioners, employed workers, students or the self-employed. Thus, before having a policy, the company must make an analysis of the situation. The usual thing to grant these insurances is that the rental fee does not exceed more than 40% -45% of the rent of the tenants.

As for the cost, it will depend on the characteristics of the tenants, the rental fee, the type of housing and the coverage that you want to charge. Thus, the cost of insurance in a 50-meter apartment for a young and solvent couple with an affordable premium will not be the same as a larger home with a slightly more doubtful solvency.

However, the normal thing is that the cost is between 3% and 5% of the annual rental income. For example, if we charge 800 euros as a rental fee for our home, it is 9,600 euros per year. This means that the cost of the insurance is between 288 euros and 480 euros.

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