If you’re at all nervous that your tenant might not be able or willing at any point to pay their rent, or that they might damage your property,  you can take out insurance to cover the risk.

Personally I’ve never bought this insurance because I’ve always made a point of meeting any prospective tenants and making sure that I feel I can trust them before agreeing to let them a property.

Generally I run credit checks and reference reports and get letters from employers to prove their good for the money and from their previous landlord to make sure they haven’t done a runner, but I’m usually relying more on my gut instinct than on any piece of paper when I accept a tenant.

It hasn’t let me down yet, but of course there’s always a risk that one day my truth-dar will fail, or that a thoroughly decent tenant will lose their job or fall ill and not be able to pay the rent and then I’ll be kicking myself I don’t take out insurance.

What does rent guarantee insurance cover?

A good rent guarantee insurance policy will pay the rent if the tenant can’t or won’t and it will cover the cost of evicting them too.

It costs about £90 per tenancy for 12 months cover (or about £55 for 6 months), but not all policies are equal. Some have high excess charges, some won’t pay out until the tenant is at least two months in arrears and pretty much all of them have an upper payment limit.

Also, you can usually only get rent guarantee insurance for tenants who have passed a comprehensive credit check. If you have a tenant who fails, you might be able to get insurance if they provide a guarantor who passes a credit check instead.

As with all insurance, you need to read the policy carefully and make sure you know what you’re buying.