Landlords depend on regular rent payments to protect their investment and positive cash flow. For a variety of reasons, tenants sometimes default on their rent payments. Rent default insurance provides protection and peace of mind for landlords when those situations occur. It covers landlords for the lost rental income in the event tenants don’t pay.
While rent default insurance is a top-tier necessity for landlords, providers in almost all instances require a deductible, which means the difference between recovering 100% of the cash flows that were owed to you and recovering only a small portion of what’s lost.
What is an Insurance Deductible?
Insurance is designed to protect people, property, and other assets by reimbursing you for any financial loss. Most insurance policies require their insured customers to be responsible for paying a predetermined, out-of-pocket amount of money prior to receiving the insurance company’s reimbursement - that is your
insurance deductible.
Ordinarily, higher deductibles equate to lower premiums - which may help you now but could create a higher burden if you are forced to make a claim later. Additionally, many companies offering rent default insurance include a deductible as part of the policy, in most cases equaling a full month’s rent. That’s why, as a landlord, you should consider companies like
Steady that provide access to top-tier rent default insurance and do not require a deductible before paying out your claim.
Rent Default Insurance Deductibles
If a tenant fails to pay their rent, a landlord would file a claim with their rent default insurance provider. If you have a policy through
Steady, you would effectively receive all the rental income that the tenant owed you under the lease, since they don’t have any deductible with their plans. Alternately, if you have a policy with a company that includes a deductible, you are required to pay it before receiving reimbursement. For example:
- If you have rent default insurance that covers up to 6 months of rent with a 1 month deductible, in the event the tenant defaults on their lease owing you 4 months of rent, you will only be reimbursed for 3 months out of the 4 months of lost rent.
- If the defaulted rent payment is $8,000 and the deductible is $2,000, you’re only getting $6,000 of your lost rental income back, leaving you with a $2,000 loss.
While most providers in the market today are charging a pricey deductible that takes away from your reimbursement, others provider offer different plans that not only include deductibles, but also add a cap to the amount you can be reimbursed for. Steady offers plans with no deductible that are also customizable, allowing customers to buy the coverage they need and that is appropriate for their specific situation.
The only way to truly ensure that you are financially protected, is to choose rent default insurance with no deductible, like
Steady.
Choose Steady: Rent Default Insurance with No Deductible
Although rent default insurance is a solid form of protection for a landlord’s rental income, the amount of the deductible is an added financial burden. That’s why you should consider rent default insurance from a company that provides quality coverage with no deductible at all, just like Steady, which provides options for up to 6 months of lost rent reimbursement with zero deductible, leaving you to focus on filling your vacancy with a quality tenant.
Steady understands that the opportunities landlords provide renters are accompanied by significant financial risks. And even the most meticulous landlords cannot guarantee that tenants won’t default on their payments. Protect your rental income, deductible-free with Steady.