For many people, the opportunity of owning buy to let property is a sound investment and in most cases turns out that way – except for when tenants don’t pay their rent.

Luckily for landlords, rent guarantee insurance will help protect the investment and ensure they aren’t left out of pocket if a tenant fails to pay up.

No matter how reliable you believe your tenants are, there might be a time when they cannot pay their rent. They may fall sick and cannot work or lose their job. For that peace of mind, this rent guarantee insurance will cover these problems.

The policies also cover legal expenses when evicting a tenant as well as safeguarding the lost rent.

Don’t forget that landlords can offset the cost of the insurance premiums against income tax as a property business expense.

Credit checks for tenants

Rent guarantee cover comes with a few hoops to jump through.

Firstly, the insurance companies like to have credit checks carried out before the tenants move in. The credit check must be carried out by a recognised credit bureau.

Landlords also have to have a signed and dated assured shorthold tenancy agreement for letting the home and proof that any deposit is on protection with an authorised organisation and the details have been passed on to the tenants.

Rent guarantee can be purchased as standalone cover or part of a bundled landlord buildings and contents policy.

Some specialist insurers also offer portfolio cover with a discount for volume business.

If buying standalone cover, property investors should check that they are not paying twice for the cover – some standard landlord insurance includes legal expenses cover, for example.

Policies also come with other restrictions – some limit the rent cover pay outs to six months or cap legal fees.