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4 important aspects of insurance for non-payment of rent that you should know

How important can it be to have insurance for unpaid rent?

Civil Law
4 important aspects of insurance for non-payment of rent that you should know

1. What is rent default insurance and what is it for?

This type of insurance is the one that covers the non-payment of rent by the tenant. If the latter stops paying more than a certain number of monthly installments -or rents- the rent default insurance would pay said fees to the landlord.

Therefore, taking out this type of insurance protects the owner against possible defaults by his tenant.

2. What are the main coverages to look for when you are going to take out insurance for non-payment of rent?

As in many other areas, the price of the insurance depends both on its coverage and on the annual rental income.

Before hiring this insurance, you have to pay special attention to the following aspects:

- Non-payment of rents. This is the basics and what leads owners to study the offers on the market to take out rent non-payment insurance. In this case, you have to look at the amount that the insurance will cover in the event of non-payment by the tenant.

- Malfunctions and inappropriate acts. Here you can realize important differences between policies and insurers, although almost all of them assume the cost of damage or inappropriate acts in the rented home once the tenant has been evicted.

- Legal defense. The non-payment of rent also usually includes in its characteristics the legal defense of the insured. Here, the differences are in the service they provide you, from just telephone attention to covering the cost of legal defense services, such as the landlord's lawyer and solicitor in case you have to go to court to solve problems with the tenant.

3. Does the insurer do a feasibility study of the tenant?

In the event of contracting this type of policy to rent your house, the insurance company will carry out a feasibility study of the tenant, accepting or rejecting the operation, according to the financial analysis carried out on the tenant/s. Thus, it will evaluate the employment situation, other loans, if they are in a delinquent registry or what amount of their income represents the monthly rental income. If the analysis is positive, the policy will become effective.

4. Who pays for the rent default insurance?

The insurance will be paid by the homeowner. That is, the policyholder will be the lessor of the home.

Civil Law

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