Non-payment of rental income is one of the greatest risks faced by the owner of a rented home. Between 2016 and 2018 the number of evictions due to unpaid rent grew by 9%, according to figures from the General Council of the Judiciary. Consequently, the contracting of non-payment insurance for rent has skyrocketed in the same period up to 158%. Contracting this insurance provides protection and peace of mind to the landlord when renting a property, which makes contracting it very attractive. The non-payment of rent insurance will cushion the effects of the delinquency of the tenants. You no longer have to worry about your tenant not paying your rent!
What is rent non-payment insurance?
Non-payment of rent insurance is designed to guarantee the rental income in the event that the tenant does not pay. The insurer guarantees the collection of rents that the tenant fails to pay. When the landlord reports the non-payment of rent, the insurer will initiate the claim against the tenant, and even if necessary, it will initiate the eviction proceedings. Once the claim is resolved, the insurer will pay the owner of the home the rent owed by the tenant. The insurer will advance the amount of the undue rent when initiating the claim, provided the non-payment has been communicated within a maximum period of three months.
How to take out rent non-payment insurance?
Taking out rent non-payment insurance for a home is simple and fast. To quote the insurance, a copy of the rental contract and the amount of monthly rent are sufficient.
As for the documentation necessary to contract the insurance, it will depend on the age of the contract:
- If the contract is new or less than a year old, the insurer will require a solvency study of the tenant. To carry out this study, you will require supporting documentation of the income obtained by the tenant: latest payslips, tax returns, unemployment benefits, other types of income...
- If the contract is more than one year old, It will not always be necessary to carry out the solvency study. Depending on the amount of the rent and the age of the contract, the insurer will only require the owner to reliably state that there have been no incidents in the payment of the rent during the entire term of the contract.
Other coverage and advantages of taking out rent non-payment insurance
- Legal defense. The insurer guarantees the defense or claim in conflicts related to the lease. This includes the claim for unpaid rent, including other fees (supplies, community, etc.) that appear in the rental contract.
- Claim for damages to third partiesother than the tenant. The claim against third parties without contractual relationship is guaranteed for damages caused to the home or its contents.
- Payment of supplies owed by the tenant. Up to the amount agreed in the policy, the insurer will assume the payment of the supplies owed by the tenant.
- Vandal acts of the tenant. Both in the continent and in the content of the house.
- Change of house lock. If the owner so wishes, the insurer will assume the cost of changing the lock up to the limit agreed in the policy.
- Loss of rent due to fire. The insurance would cover the rental income not received as a result of the house fire.
How does the coronavirus affect rent non-payment coverage?
El Royal Decree-Law 11 / 2020, of March 31, by which urgent measures are adopted in the social and economic field to deal with COVID-19, provides the suspension of evictions for a maximum period of 6 months from April 2, 2020. In other words, until October 2020, eviction lawsuits against tenants who do not pay rent may not be filed in court.
Nonetheless, coverage for non-payment of rent is not suspended. If you have non-payment of rent insurance, at the time that the insurer's lawyers are ready to file the eviction lawsuit in court, the rent owed by the tenant will be advanced.
Do you want to know more about how the coronavirus has affected this type of insurance? We tell you in our article «Increases the contracting of landlord protection insurance»
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