Rent Default Insurance
Landlords can finally have peace of mind knowing that rental income is guaranteed, even when tenants stop paying rent.
Protection Plus – Policy Benefits Checklist
*A deductible of $1,500 per event will be applied to all Malicious Damage and Theft Claims.
This crucial insurance is available exclusively through Professional Property Managers.
Eligibility Criteria
- Scheer Landlord Protection Insurance is only available for properties that are managed by a Professional Property Management Agent.
- Coverage is not available on any property with a monthly rent below $1,000.
- All claims will be settled according to the lesser of the rent on the current lease, or up to a maximum per month rent cover of $3,000.
- Tenant occupied properties where the tenant is not current on rent and had not paid rent on time for the previous two months, will not be eligible for the Loss of Rent, Eviction and tenant malicious damage Promises until those conditions are met.
What’s Covered:
What’s Not Covered:
Requirements to Qualify
- New or existing residential lease agreement with a remaining period of more than 6 months.
- The tenant(s) must use the rental unit as a primary residence (no coverage for vacation homes or short-term rentals)
- Tenant credit score greater than 580.
- Tenant’s monthly income ≥ 2.5 x monthly rent; or Tenant’s liquid assets ≥ 80 x monthly rent
- Tenant has no history of bankruptcy, foreclosure, judgments, eviction, or ending a lease owing money to a landlord in last 3 years.
- If the lease has been in effect for less than 12 months, a tenant screening report must be available. If the lease has been in effect for more than 12 months, the tenant’s rent payments must have not been in arrears for the period of the tenancy.
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Any tenant late payments must be cured for a period of 60 days before enrolling in policy.
Frequently Asked Questions
THE BASICS
What is Landlord Rent Default Insurance?
It’s insurance that indemnifies landlords for loss of rent resulting from a tenant defaulting on rent payment obligations. This insurance provides landlords with a guarantee on the lease performance and peace of mind knowing that they can protect the rental income used to service the mortgage, pay property taxes or maintain the unit.
Who should consider getting it?
Any owner of a residential rental unit that has at least 6 months remaining on the lease. This insurance is for rentals that are used as a tenant’s primary residence, and so it is not available for vacation homes or short-term rentals. There is also a list of requirements that need to be met to qualify for the insurance, such as the tenant must have a minimum credit score of 580, a monthly income of 2.5 times the monthly rent, and must not have been the subject of an eviction proceeding, bankruptcy, foreclosure or judgments in the last 3 years. The full list is available in the Qualification Requirements document.
Does my property insurance provide coverage in the event of tenant default?
Traditional dwelling or landlord insurance policies may sometime offer coverage for some portion of the loss of rent resulting from a covered peril, such as fire, but not necessarily for loss of rent resulting from a tenant’s default. Check your dwelling or landlord policy for details.
How much does Landlord Rent Default Insurance cost?
$42 per month per unit, plus taxes and state insurance fees. This will be billed to your account monthly.
How can I buy Landlord Rent Default Insurance?
You can inquire for the insurance through the contact form on this page. We would need the landlord’s contact information, the rental unit’s address, monthly rent amount, required coverage limit, coverage start date, and by certifying that all the insurance Qualification Requirements are met. Once the completed and signed inquiry form is received, we will survey the insurance markets. If coverage is not available from an admitted insurance carrier, the policy will be bound with a Surplus Lines Insurance company.
What is Surplus Lines Insurance?
Excess and surplus lines insurance is a segment of the insurance market that allows customers to buy insurance that is not available through insurers licensed in the customer’s state. One of the major differences between admitted and surplus lines insurance is that purchasers of surplus lines insurance policies do NOT have the protection provided by the state’s guaranty fund.
COVERAGE AND EXCLUSIONS
What does Landlord Rent Default Insurance Cover?
It covers the insured landlord for loss of rent resulting from a tenant’s nonpayment. There are many life events that can cause a tenant to stop paying rent: job loss, job relocations, evictions, break-ups, marriage, newborn babies, death, military deployment, etc… Any of these or other common life events that can cause a tenant to have to break a lease.
What is the maximum amount of loss of rent covered by the insurance?
The policy will cover up to $3000 per unit per month, for a period of up to 25 weeks.
What tenant default events would not be covered by the policy?
There are some instances that could result in loss of rent that would not be covered. For example, a default would not be covered under the policy if the default is caused by the rental unit becoming uninhabitable, the landlord failing to comply with applicable law, building codes, or the terms of the lease. A complete list of coverage exclusions is available in the policy.
Does the policy provide coverage immediately when I purchase it?
The policy has a 21-day waiting period, which means that tenant defaults occurring within the first 21 days from the policy start date would not be covered.
Is there a deductible? What if the lease has a security deposit?
There is a deductible for Malicious Damage and Theft claims. The deductible is $1500 per event. However, the policy could reduce reimbursement by any “rent credits.” For example, the policy provides that proceeds from any security deposit will be applied: 1st) to pay for damages to the rental unit incurred during the lease (excluding ordinary wear and tear); 2nd) to the payment of any legal fee incurred in connection with the tenant’s default; 3rd) to pay for any re-tenanting fee, and 4th) towards unpaid rent as a “rent credit.”
