Insurance
Rent guarantee insurance: complete guide for landlords
Losing rental income when a tenant stops paying is one of the biggest financial risks a landlord faces. Even with careful tenant vetting, rent arrears can happen to any property owner and the cost of recovering possession through the courts adds insult to injury. Rent guarantee insurance exists to protect you from exactly this scenario. This article explains everything you need to know, including what it covers, what it costs, how to make a claim, and whether it is worth it for your portfolio.
What is rent guarantee insurance?
Rent guarantee insurance, which is also called landlord rent guarantee insurance or RGI, is a specialist insurance policy that pays out when your tenant falls into rent arrears and stops paying. The policy covers the lost rental income for a defined period, usually between 6 and 24 months, while you go through the legal process of resolving the situation or regaining possession.
Most policies bundle rent guarantee cover with legal expenses insurance, which pays the solicitor and court fees involved in pursuing a possession claim. Together, these two elements can save a buy-to-let landlord tens of thousands of pounds in the event of a serious arrears dispute.
What does rent guarantee insurance cover?
Cover varies between insurers, but most standard policies include the following elements.
Rent protection
The core element of the policy pays a monthly benefit equivalent to your lost rent, up to a set monthly cap (commonly £2,500 per month). Payments typically begin once the tenant has been in arrears for a specified period (often one or two months) and continue for the duration of the claim period or until the property is vacant and you can re-let, whichever comes first. Some policies also cover a short void period after the tenant vacates while you prepare the property for a new tenancy.
Legal expenses cover
This element pays solicitor costs, court fees, and bailiff costs for a possession claim. In England and Wales, eviction proceedings can cost between £1,500 and £5,000 in legal fees alone, so having this covered is significant. Check whether your policy covers:
Section 8 possession proceedings - the standard eviction route for rent arrears under the Renters' Rights Act 2026
Mediation costs - some policies will cover the cost of pre-court mediation
Enforcement costs - including High Court enforcement agent fees if you escalate the matter
What is typically excluded?
Read the exclusions carefully before buying. Most policies will not pay out if:
Tenant referencing was not completed - the insurer will require evidence of a full credit and reference check before the tenancy started
Arrears pre-date the policy - you cannot buy a policy after a tenant has already stopped paying
The tenant is known to be in financial difficulty - disclosure obligations apply at the point of underwriting
The property is an HMO without proper licensing - unlicensed HMOs are typically excluded from cover
The tenancy is not an AST (or its successor) - most policies only cover assured shorthold tenancies and their replacement under the Renters' Rights Act
The claim is not reported within the required timeframe - most policies require you to notify the insurer promptly, often within 30 to 60 days of arrears arising
How does rent guarantee insurance work?
You buy the policy at the start of a new tenancy (or at renewal), providing evidence of a satisfactory tenant reference. The insurer keeps the policy in force for the duration of the tenancy. If your tenant stops paying, you notify the insurer and submit a claim.
How to make a claim
The general process looks like this:
Tenant misses a payment – note the date and keep a payment record.
Issue a formal late rent notice – this creates a paper trail and is often a requirement of the policy.
Attempt to resolve the arrears – contact the tenant in writing to agree a repayment plan and document every communication.
Notify your insurer – most policies require notification within 30 to 60 days of the first missed payment; check your specific policy wording.
Submit evidence – the insurer will typically ask for the tenancy agreement, reference report, rent account, and your communications with the tenant.
Monthly payments begin – once the claim is approved, the insurer pays the monthly benefit directly to you.
Legal process begins – if the legal expenses element is triggered, the insurer's solicitors will usually manage the possession claim on your behalf.
Do not wait too long before notifying your insurer. Late notification is one of the most common reasons for claims being rejected. For guidance on issuing notices correctly, see the dictionary entry on late rent notices.
How much does rent guarantee insurance cost?
Premiums vary depending on the monthly rent, the property location, the policy excess, and the length of cover. As a rough guide:
Policies typically cost between 2.5% and 5% of the annual rent.
On a property with £1,000 monthly rent (£12,000 per annum), expect to pay roughly £300 to £600 per year.
Some insurers offer cover from around £15 to £25 per month for a standard single-let property.
Adding standalone legal expenses cover usually costs an additional £50 to £100 per year.
Shop around. Some landlord insurance packages bundle rent guarantee as an add-on, which can be more cost-effective than a standalone policy. Others offer it as a separate product, which may provide more tailored protection for your specific circumstances.
What are the eligibility requirements for rent guarantee insurance?
Rent guarantee insurance comes with specific conditions that must be met at the point of underwriting. If you do not meet them, you risk having a claim declined when you need it most.
Tenant referencing requirements
This is the single most important eligibility condition. Almost every insurer requires that the tenant passed a full tenant reference before the tenancy started. A standard reference includes:
Credit check – looking for county court judgements (CCJs), individual voluntary arrangements (IVAs), bankruptcy, and overall credit score.
Employment verification or proof of income – the standard affordability test is that gross income equals at least 2.5 to 3 times the annual rent.
Previous landlord reference.
Identity verification.
Keep a copy of the full reference report. The insurer will ask for it if you make a claim. For more detail on what good referencing looks like, see the guide on what is tenant referencing for landlords.
Tenancy and property requirements
The tenancy must usually be an assured shorthold tenancy, or from May 2026, the new periodic tenancy structure introduced under the Renters' Rights Act. The property must be in England or Wales (some policies extend to Scotland under slightly different terms). Most policies do not cover tenancies with a monthly rent above a certain ceiling, commonly £5,000 per month, without a specific endorsement.
Rent guarantee insurance vs rent protection insurance
These two terms are often used interchangeably, but technically:
Rent guarantee insurance - the broader product that typically combines rent protection payments with legal expenses cover.
Rent protection insurance - sometimes refers specifically to the rent payment element only, without the legal expenses component.
When comparing policies, look at what is actually included rather than the product name. The most useful policies bundle both elements together, since it is rarely worth covering the rent but not the legal costs of recovering possession.
Rent guarantee insurance vs a guarantor
A guarantor is a third party (usually a parent or family member) who agrees to pay the rent if the tenant cannot. Guarantors can be a useful protection mechanism, particularly for student lets or tenants with a limited credit history. However, there are important differences compared to a rent guarantee insurance policy:
Enforcement - pursuing a guarantor still requires legal action if they refuse to pay; an insurer pays out according to defined policy terms.
Financial capacity - a guarantor may not have the means to pay even if legally obliged to do so.
Ongoing protection - a guarantor arrangement relies on a named individual remaining willing and able to pay throughout the tenancy; insurance provides consistent protection.
Professional management - insurers manage the legal process on your behalf; recovering money from a guarantor is left entirely to the landlord.
Many experienced rental owners use both: a guarantor as an additional safeguard for higher-risk tenants, combined with a rent guarantee insurance policy for broader protection throughout the tenancy.
Do you need rent guarantee insurance after the Renters' Rights Act?
The Renters' Rights Act 2026 has made rent guarantee insurance more relevant than ever for UK landlords. With the abolition of Section 21 no-fault evictions, landlords can now only regain possession through the Section 8 grounds framework. This means that even in a straightforward rent arrears case, a property owner must:
Serve a valid Section 8 notice using the prescribed form, with the correct notice period.
Issue court proceedings if the tenant does not leave voluntarily.
Attend a court hearing and obtain a possession order.
Apply for a warrant of possession to enforce the order.
The entire process, from the first missed payment to the tenant vacating, can take anywhere from three to nine months or longer depending on court backlogs. During that period, having an insurer paying your monthly rent and covering legal costs provides critical financial stability. For more detail on the possession process and timelines, see the guide on evicting tenants in arrears and court timelines.
If you want to understand what Section 8 grounds are available under the new regime, the article on grounds for possession under the Renters' Rights Act in 2026 covers each ground in detail.
How to choose the right rent guarantee insurance policy
When comparing policies, ask the following questions before committing:
What is the monthly cap? Make sure the maximum monthly benefit covers your actual monthly rent.
What is the maximum claim period? Look for at least 12 months of cover; 24 months is preferable given how long possession proceedings can take.
Is there a policy excess period? Some policies exclude the first one or two months of arrears. Factor this into the true cost of the cover.
Does it include legal expenses? If not, check the cost of adding it – and whether the combined premium still represents value.
What referencing standard is required? Ensure you can meet the insurer's referencing requirements at the point of taking out the policy.
Is the policy per property or per portfolio? Portfolio landlords may be able to arrange a blanket policy across multiple properties at a reduced rate.
What is the claims handling reputation? Read independent reviews and check average claim approval times before choosing a provider.
Does it cover the void period after eviction? Some policies include a short void benefit while you find a new tenant.
How long does a rent guarantee insurance claim take?
Once a claim is submitted with all required documentation, most insurers aim to approve and make the first payment within 10 to 14 working days. After that, monthly payments are typically made in line with your rent due date.
The legal expenses element takes longer, since it is linked to the actual possession proceedings. From the point of instructing solicitors to obtaining a possession order, the process typically takes between three and twelve months depending on the court, the tenant's response, and whether the matter is defended. In more complex cases, such as those involving counterclaims or disrepair allegations, timelines can extend further.
Frequently asked questions about rent guarantee insurance
Can I get rent guarantee insurance mid-tenancy?
Some insurers will offer cover mid-tenancy provided the tenant has passed a satisfactory reference and is not currently in arrears. However, most prefer the policy to be in place from the start of the tenancy. Check with the insurer directly before assuming cover is available.
Does rent guarantee insurance cover damage to the property?
No. Damage to the property is covered under landlord buildings and contents insurance, not rent guarantee insurance. These are separate products and most rental owners need both. Make sure your landlord insurance policy is also current and covers the property adequately for its rental use.
Can I claim if the tenant abandons the property?
Most policies do cover abandonment, but you will need to follow a specific process to confirm the property has been abandoned before a claim can be validated. This typically involves attempting to contact the tenant, checking for signs of occupation, and obtaining the insurer's approval before re-entering. Check your policy wording carefully.
Is rent guarantee insurance tax-deductible?
Yes. Rent guarantee insurance is a legitimate business expense that can be deducted from rental income before calculating your tax liability. For a full list of allowable deductions, see the guide on allowable expenses for landlords.
Do I need rent guarantee insurance if I use a managing agent?
A managing agent manages the property on your behalf but does not guarantee your rent unless they offer a specific guaranteed rent service (sometimes called a rent-to-rent arrangement). Standard management does not provide this protection. You need a separate insurance policy regardless of whether you self-manage or use an agent.
Does rent guarantee insurance cover a lodger?
No. Lodger arrangements are excluded from most rent guarantee policies because a lodger is typically a licensee rather than a tenant. The policy is designed for assured shorthold tenancies only.
Key takeaways
Rent guarantee insurance pays lost rent and covers legal costs when a tenant stops paying, making it one of the most practical financial protections available to UK landlords.
It might be worth understand more broadly what landlord insurance do you need?
Tenant referencing before the tenancy starts is a prerequisite. Without a satisfactory reference report, a claim will almost certainly be refused.
Policies typically cost 2.5% to 5% of annual rent and most cover 12 to 24 months of arrears, with an optional void period benefit.
The Renters' Rights Act 2026 makes this cover more important than ever, since possession through the Section 8 framework can now take six to twelve months or more.
Compare policies on monthly cap, excess period, maximum claim duration, legal expenses inclusion, and the insurer's claims handling reputation.
Rent guarantee insurance premiums are tax-deductible as a landlord business expense.
For further guidance on managing rent arrears from a practical and legal standpoint, see the complete guide on rent arrears – what landlords can do step by step.
This article is intended for general informational purposes only and does not constitute legal, financial, or professional advice. Landlord and tenant law is subject to change, and the information in this article reflects the position at the time of writing. You should always seek independent legal or professional advice before taking any action in relation to your property or tenancy.
Author
August Team
The August editorial team lives and breathes rental property. They work closely with a panel of experienced landlords and industry partners across the UK, turning real-world portfolio and tenancy experience into clear, practical guidance for small landlords.
