In these times, given the current situation, doubts have been generated regarding long term rentals. Among homeowners there are many who prefer to wait on renting out of fear that tenants will not be able to pay their monthly rent in time.

We know that renting a house can be a risky thing that can generate distrust and renting a flat sometimes becomes a risky business. One of the main risks assumed by the owner of a rented flat is that the tenant will stop paying the rent. In order to prevent this risk, rent protection insurance was created, which has become a safe and effective tool to be able to rent a property without suffering shocks.

With this type of insurance, in the event of non-payment of rent, the owner of the property is guaranteed to receive from the insurance company the amount of the unpaid rent and also financial compensation for any malicious damage that may have been caused by the tenant.

In the process of renting a property, the first thing the owner usually does is to check the financial capacity of the future tenant to be able to pay rent. Until now, it has been common to ask the future tenant for personal guarantees or bank guarantees, which are very expensive and sometimes difficult to obtain. The current trend is to abandon these old practices and opt for rent protection insurance, which is much more effective for landlords and more affordable for tenants.

This ambivalence is very interesting, because both parties benefit. Rent protection insurance proves to be a very useful tool for the landlord since, through the insurance company, it helps him to choose the right tenant by studying his financial solvency which, in a way, guarantees the payment of the monthly rent.

On the other hand, it also benefits the tenant who otherwise, even if solvent, would probably not be able to access a home because he does not have sufficient economic capacity to afford other types of guarantees (such as bank or personal guarantees, deposits of several months, etc.).

The contracting of this type of insurance requires certain requirements to be met since the insurer, who would have to assume the payment of unpaid rent and possible damage to the property, will not take on this risk without having certainty about the capacity to meet these payments by the future tenant.

Therefore, the first thing you will do is check that the tenant is not registered in any of the existing defaulting bases; that his employment contract is more than one year old and that the annual amount of rent does not exceed 40 or 45 percent of his annual net income. In order to prove these points, you may demand the documents you deem necessary.

It is advisable that the owner or the landlord of the property is the policyholder and the one who pays the insurance, even if they reach an agreement to pass on the cost to the tenant. The reason for this is that if the tenant is the policyholder and stops paying the rent, it is more than likely that he or she has already stopped paying the insurance premiums, which would temporarily void the guarantees or even make the insurance null and void, leaving the landlord unprotected.

With regard to the price of rental default insurance, it should be noted that it is between 3% and 5% of the annual rent. This means that, in the case of a rent of 1,000 euros per month, it implies a cost of between 360 and 600 euros per year. However, these figures should be taken as a guideline since they vary for each company.