Owning rental property can be lucrative. If your tenants bail on you without adequate notice, however, you can be stuck with a lot of bills and no way to pay them. Loss of rent insurance can compensate you during these incidents if you qualify for it. There are several factors that insurance companies consider to determine your eligibility.
Who Is Eligible for Coverage?
As outlined on https://www.rentrescue.com, landlords with contracted properties whose tenants meet certain risk requirements are typically eligible for rent default insurance. Owners of multifamily units, townhomes and rental houses may qualify for coverage if they rent to tenants who fulfill minimum financial stability requirements:
- No evictions within the last five years
- No recent bankruptcies
- Financially capable of paying rent
Because your eligibility is directly related to your tenants’ rental records, it is important to screen prospective renters. Not offering a rental contract to potentially problematic tenants lowers the risk for your insurance company.
What Isn’t Eligible for Coverage?
Rent default insurance only covers the loss of the rent payment itself under normal circumstances as described by your policy. No property damage is covered, nor is loss of rent due to issues with the building itself.
Your insurance agent can help you navigate the coverage you need to protect your business. Rent default insurance may be a good policy to add to your package.