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Landlord insurance “not designed to protect against non payment of rent”

Insurance policies that claim to protect landlords from non-paying tenants are ineffective, claims the head of the Alquiler Seguro rental agency.

Antonio Carroza, CEO of Alquiler Seguro, a Spanish company providing rental intermediary services, has warned that insurance plans for rental protection “are not effective in combating non-payment of rent, as they exist to cover eventualities and accidents, not purposeful non payment.”

According to Carroza, rental-protection insurance plans offer a sense of ‘false security’ to landlords as the small print usually includes multiple clauses limiting their rights. He points out that estate agents frequently mis-sell these policies to landlords as contractually binding, when in reality they are not.

“When cases of non payment end up in court and the tenant is found to be insolvent (which happens in many cases), the landlord will not only be unable to recoup the unpaid rent but will also have to pay back the money that has been lent to them to this effect by their insurance company,” explains Carroza.

Tenants who don’t pay the rent rarely pay their utility bills either, leaving landlords who thought they were insured against this eventuality further out of pocket.

Carefully vetting potential tenants is the best way for landlords to avoid problems, says Carroza. Insurance policies are ineffective, and just leave landlords further out of pocket.