According to data from the Bank of Spain, property rentals show an average annual return of 10.5%. However, while leasing a home can mean extra income, many homeowners think twice about it because of the risk of tenants defaulting or damaging the home.

Furthermore, with the current situation generated by the coronavirus pandemic, the uncertainty has increased slightly. But, don't let fear paralyze you! You should know that there are currently safe ways to protect yourself against late payment, one of them very interesting and that we will analyze below: rental non-payment insurance.

What is rent non-payment insurance?

Non-payment rent insurance is a protection policy that is mainly concerned with offering a guarantee in the event that the tenant of the home does not pay. If so, the insurance would assume the payment of the outstanding monthly payments depending on the policy contracted, which can be 6, 8, 12 and up to 18 months.

In addition, these types of policies not only deal with the non-payment of the rent when putting your house for rent, but they offer other additional services such as legal protection to the owner, repair of damages caused to the property by the tenant, locksmith expenses and lock in case of eviction, among others. Finally, companies also often conduct a financial solvency study of the prospective tenant to try to prevent delinquencies.

In what situations can the insurance or warranty be activated?

If you decide to rent your home, non-payment rental insurance can give you greater peace of protection towards your property. However, it is important to be clear from the beginning what the policy you are hiring covers and how and when it can be activated. In reality, each company establishes a series of assumptions in which the policy can be used, as well as the amount of money to be paid as compensation in each case.

We recommend that you review the contract well to avoid surprises when making the claim for the rental money. In general, most insurers request that the landlord have made an official claim for the rental and that several months have also elapsed before they can carry out the management for non-payment. Likewise, it is possible that a final judgment will be requested attesting to the delinquency of the tenant.

Non-payment insurance cost for home rental

As with all policies, the price depends on the coverage and the higher the compensation, the more expensive the policy will be. The amount of money received depends on the rental of the dwelling, which means that the higher the rental price, the higher the insurance price.

In any case, you should know that, on average, the cost of rental insurance is between 3% and 5% of the annual income that the owner gets.

With the current crisis, many homeowners have decided to take out non-payment rent insurance. However, it is important that you take a good look at the conditions of the policy to determine whether or not your contract is convenient for you. If you need advice in this regard, do not hesitate to contact the team of experts from Proyectos Insulares. We will be happy to help you!