Rent guarantee insurance cost is small relative to what it covers, which is the normal shape for an infrequent large loss. Breaking the premium into its parts makes the comparison between quotes meaningful, because two policies at similar prices frequently carry different periods, different excesses and different treatment of legal costs.
The rent at risk
The largest part of what the premium buys: a stated number of months of rent, paid monthly from the trigger point. A higher rent and a longer period both raise it. Twelve months costs more than six and is usually the better buy, because a contested possession can outlast a six month policy.
The legal costs
Possession proceedings are the other half and are sometimes priced separately. For a landlord facing a first possession action, this half is frequently the more valuable one, because the alternative is paying privately for a process with several stages and an uncertain timetable.
What reduces the premium and what should not
A longer excess period, expressed in months of arrears you carry yourself, lowers the price honestly. A shorter cover period lowers it at the cost of the protection. Buying without legal expenses lowers it and removes the half that funds the remedy. Only the first is a saving rather than a reduction in cover.
Questions people ask about rent guarantee insurance cost
How much should I expect to pay?
It is quoted either as a fixed annual amount per tenancy or a percentage of the annual rent, and varies with the period, the excess and whether legal costs are included.
Is twelve months worth the extra?
Usually, because a contested possession can outlast a six month policy and leave the landlord carrying the tail.
Can I buy it without legal expenses?
Some policies allow it and it removes the half that funds the remedy. For most landlords that is a false economy.