Rental Default Insurance | How do they work?

The most comfortable way to rent a home today is thanks to the unpaid rental insurance .

If you want to have the peace of mind of not having future problems with your tenant (unpaid installments, damages, evictions) the unpaid rent insurance will avoid this type of problems.

In this article I will explain how they are hired, what insurers do and what coverage this type of insurance charges.

How the Non-payment of Insurance Insurance works

How the Non-payment of Insurance Insurance works

The demand for rental housing is on the rise.

Cities like Madrid and Barcelona have increased their rental prices and the supply of rental housing is becoming increasingly scarce. This causes the owners who put their homes on the market demand products that ensure their rents and avoid problems with their tenants.

Before it was very common for the landlord to demand bank or personal guarantees to the tenant, defaults, evictions and damages can cost, to avoid this insurance can cover all your needs.

Unpaid rent insurance is a new formula that allows the owner to cover future monthly rent defaults.

Normally an unpaid rental insurance guarantees the following concepts

  • Legal Protection to the lessee in the whole process.
  • Cover property damage (if any) once the eviction is completed.
  • Cover the payment of the unpaid months, and advance the rental months when the eviction begins.

In January 2018, the average rental price of homes in Spain is € 1,168 per year, this represents an increase of 1.28% compared to December 2017.

Among the functions performed by the insurance (including coverage), is the realization of a filter to the tenant, in which it is not in the Good Finance, judicial debts, etc.

This filter determines the type of customer that can be and what payment guarantees can be offered to the lessee of the property.

The cost of hiring Insurance Non-payment of Rent

The cost to a lessee of unpaid rental insurance is usually between 3% and 5% of the annual rent.

An example of the Mutual indicates that for a monthly rental of € 500 the annual cost of insurance would be € 241 / year.

When will we use the Default Insurance

When will we use the Default Insurance

When the tenant begins to be late in their payments within 10 days we will have to inform the insurer’s lawyer of the incident.

It is very important to know the deadlines determined by our insurance contract so the notification of the incident is extremely important for us to pay the fees due. The legal department will contact the tenant to clarify the situation and resolve the case in a friendly manner.

In the event that an eviction claim must be filed, the insured may claim from the insurer the total unpaid income so far.

For example, the insurance company Good Lender offers the following coverage conditions:

Payment of unpaid income:

  • Coverage up to 12 months.
  • Franchise: 1 month.
  • Maximum sum: € 3,000 monthly rent.
  • Advance unpaid income initiated the eviction process

Vandalism to the continent committed by the tenant:

  • Damage to the continent caused by vandalism committed by the tenant.
  • Theft of parts of the continent by the tenant.
  • Coverage limit: € 3,000 at first risk.
  • Franchise: € 300.

Insurance Companies that carry out this type of Insurance


I have searched 3 companies that offer this type of Insurance so you can choose the one that can best fit your profile.

In summary, the Rent Defaults Insurance is a fashion product that gives you security when renting your properties. According to a study of the insurers almost 70% of the insured renew it .

Therefore, if we get to rent, hiring this type of coverage can save us headaches.