Rent Guarantee Insurance: Is It Worth It?

Our landlord insurance guide covers the core policy types. Rent guarantee insurance (sometimes called rent protection insurance) is usually a separate add-on, not something automatically included — and it's one of the more commonly debated optional covers among landlords.

What it actually covers

Rent guarantee insurance generally pays out a set amount of rent (often up to a specified monthly limit, for a set maximum period) if your tenant stops paying rent, typically once arrears reach a certain threshold and the correct notice process has been followed. Many policies also include or bundle in legal expenses cover, contributing toward the cost of pursuing possession through the courts if it comes to that.

What it typically does not cover

Cover usually excludes rent that was already in arrears before the policy started, and most policies require you to have properly referenced the tenant (credit checks, employment and previous landlord references) before the tenancy began — a claim can be refused if referencing wasn't done or wasn't done properly. Policies also typically require you to follow the correct legal eviction process promptly once arrears build up, rather than delaying action, and may have a cap on how many months they'll pay out before cover ends.

The cost, roughly

Cost varies by provider, property, and the level of cover chosen, but is typically a modest percentage of annual rent, or a fixed annual premium — often a relatively small amount compared to a single month's lost rent, which is the core of the value calculation.

Weighing it up: the case for taking it

The appeal is straightforward: a tenant who stops paying and needs to be legally evicted can easily cost several months of lost rent, plus legal costs, before you regain possession — a scenario that can run into thousands of pounds. For landlords who rely on rental income to cover a mortgage, or who have less financial buffer to absorb a period of no rent, the insurance can convert an unpredictable, potentially large loss into a small, predictable annual cost.

Weighing it up: the case against

If you thoroughly reference tenants and have a track record of reliable payers, some landlords consider the ongoing premium not worth it relative to the actual likelihood of a claim, particularly if you have enough financial buffer to absorb an occasional bad tenancy without the insurance. It's also worth factoring in that the requirement to reference tenants properly and act quickly on arrears is something well-run landlords should be doing anyway, insurance or not.

Questions worth asking before buying a policy

Before choosing a policy, it's worth checking: the maximum monthly payout and total claim period, whether legal expenses cover is included or separate, what referencing standard is required for a valid claim, any excess or waiting period before payments start, and whether the policy covers rent only or also things like malicious damage caused by a non-paying tenant.

It's not a substitute for proper tenant selection

Rent guarantee insurance is a financial safety net, not a reason to skip thorough referencing — most policies require good referencing as a condition of cover anyway, and even with insurance in place, dealing with a non-paying tenant and going through the eviction process (see our eviction guide) remains time-consuming and stressful, regardless of whether the rent itself is covered.

This is general information about the law in England, not personalised legal advice — Scotland, Wales and Northern Ireland have different rules, and landlord law changes regularly (some areas covered here are under active reform). For anything that affects a real tenancy, check GOV.UK for the current position or speak to a solicitor or a body like the National Residential Landlords Association (NRLA).