Rent guarantee insurance — also called tenant default insurance or rent protection insurance — pays landlords their rental income when a tenant stops paying. It also typically covers the legal costs of eviction proceedings.
Until relatively recently, many landlords considered it an optional extra. In 2026, with Section 21 no-fault evictions abolished from 1 May and the Renters’ Rights Act 2025 significantly extending eviction timelines, the case for it has strengthened substantially. The financial risk of a non-paying tenant who cannot be quickly removed has materially increased.
This guide covers what rent guarantee insurance covers, what it costs, what the exclusions are, and when it is worth having.
What Rent Guarantee Insurance Covers
A standard rent guarantee policy typically includes:
- Rental arrears — the insurer pays the landlord their monthly rent when the tenant defaults, usually up to a monthly cap (commonly £2,500 per month) and for a defined period (typically 12 months)
- Legal expenses — the cost of serving eviction notices, pursuing possession through the courts, and instructing solicitors, up to a set limit (commonly £50,000 to £100,000)
- Eviction costs — including bailiff fees and the costs of recovering the property once a court order is obtained
- Legal helpline access — most policies include 24/7 telephone legal advice for landlords dealing with tenant issues
Some more comprehensive policies also cover:
- Malicious damage by tenants
- Alternative accommodation costs if damage makes the property uninhabitable
- Pursuit of squatters
What It Does Not Cover
Understanding the exclusions is as important as understanding the cover.
- Void periods between tenancies — the period when a property is empty and looking for a new tenant is not covered. Rent guarantee insurance only responds when an existing tenant defaults, not when there is no tenant.
- Tenants not properly referenced — this is the most common reason claims are declined. Almost every policy requires comprehensive tenant referencing — including identity, credit, and affordability checks through a licensed referencing service — before the policy is taken out. If you did not complete adequate referencing before the tenancy began, you almost certainly cannot make a valid claim.
- Pre-existing arrears — the default must arise after the policy is in place. You cannot take out a policy after a tenant has already stopped paying.
- Certain tenant types — some policies exclude students, HMO tenants, or tenants in receipt of housing benefit, or charge higher premiums for these categories.
How Much Does It Cost
Rent guarantee insurance typically costs around £195 per year for a standard single let, though pricing varies by insurer, property type, rental level, and tenant profile.
Current market pricing (May 2026):
- Standard policies from around £8 to £15 per month (£96 to £180 per year) for standard employed tenants
- OpenRent’s policy costs £299 per year including legal expenses cover
- HMO and higher-risk tenant categories attract higher premiums
The cost of rent guarantee insurance is tax-deductible against your rental income, which reduces the effective annual cost for higher-rate taxpayer landlords.
For context: average tenant arrears reached more than £2,200 in early 2025, according to iHowz data. A single month’s eviction process — which under the reformed system can take significantly longer than under Section 21 — can generate far more in legal costs and lost rent than a year of premiums.
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Why It Matters More in 2026: The Renters’ Rights Act Impact
The abolition of Section 21 no-fault evictions from 1 May 2026 under the Renters’ Rights Act 2025 is the single biggest change to the risk profile of rent guarantee insurance.
Under the old system, a landlord could use a Section 21 notice to regain possession without proving fault — typically a two-month notice followed by a court process. It was far from instant, but it was a relatively predictable path.
Under the new system, possession requires one of the specified Section 8 grounds — rent arrears being the most commonly used. The process is longer, more contested, and more legally complex. If a tenant falls back into arrears, the policy will still provide cover for eviction after three months.
For a landlord relying on rental income to service a buy-to-let mortgage, the combination of longer eviction timelines and the absence of a fast no-fault route makes the financial exposure from a non-paying tenant significantly greater than it was before May 2026. Rent guarantee insurance directly bridges that exposure.
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Who Needs It Most
Rent guarantee insurance is most valuable for landlords who:
- Rely on rental income to pay a mortgage — a non-paying tenant while the mortgage must still be serviced is the highest-risk scenario the policy directly addresses
- Have a single property — a portfolio landlord can absorb one non-paying tenant across multiple income streams. A landlord with one property cannot.
- Are new to landlording — experienced landlords with established processes and legal knowledge are better positioned to manage arrears quickly; newer landlords benefit more from the policy’s legal helpline and expense cover
- Let to higher-risk tenant profiles — not as a reason to discriminate, but as a recognition that some tenancies carry higher statistical default risk
It is less critical for landlords who own their property outright with no mortgage, who have sufficient savings to absorb several months of missed rent, and who have experience managing the eviction process.
For independent comparison of rent guarantee insurance policies, check: Money.co.uk — rent guarantee insurance comparison
Key Things to Check Before Buying
Not all rent guarantee policies are equal. Before purchasing:
- Confirm what referencing is required — most policies require referencing through a FCA-approved referencing service. Check the exact standard required before the tenancy starts, not after.
- Check the monthly cap — if your rent is £2,000 per month and the policy caps at £2,500, you are covered. If your rent is higher, find a policy with a higher cap.
- Check the indemnity period — most policies cover up to 12 months of arrears. For high-value properties where the eviction process could take longer, 12 months may not be enough.
- Check the legal expenses limit — eviction proceedings can be expensive. A £50,000 legal limit is sufficient for most cases; complex contested cases can cost more.
- Check tenant type restrictions — if you let to students, housing benefit tenants, or HMO tenants, confirm the policy covers them.
For government guidance on the Renters’ Rights Act 2025 and the possession process, check: GOV.UK — private renting and the Renters’ Rights Act
Conclusion
Rent guarantee insurance provides landlords with financial protection against the most common and most financially damaging risk in property letting — a tenant who stops paying and cannot be quickly removed. At around £150 to £300 per year, tax-deductible, and covering up to 12 months of arrears plus legal costs, it is cost-effective for any landlord whose rental income services a mortgage.
With Section 21 now abolished and eviction timelines extended, the risk exposure of a non-paying tenant has increased in 2026. For landlords who have not already reviewed their insurance position in the light of the Renters’ Rights Act changes, now is the time to do so.
Frequently Asked Questions
Is rent guarantee insurance more important after the Renters' Rights Act 2026?
Yes — the abolition of Section 21 from 1 May 2026 has extended eviction timelines and made regaining possession from a non-paying tenant more complex and more costly. For landlords servicing a buy-to-let mortgage, the financial exposure from a non-paying tenant under the new regime is greater than under the old system, making rent guarantee insurance more commercially important than it was before the Act came into force.
How much does rent guarantee insurance cost in 2026?
Standard policies start from around £8 to £15 per month for a standard employed tenant in a single let. OpenRent’s policy including legal expenses cover costs £299 per year. The cost is tax-deductible against rental income, reducing the effective cost for landlords paying higher-rate income tax.
Is tenant referencing required for rent guarantee insurance?
Yes — almost every policy requires comprehensive tenant referencing through a licensed referencing service before the tenancy starts. Failing to complete adequate referencing is the most common reason rent guarantee insurance claims are declined. Check the specific referencing requirements with the insurer before any tenancy begins.
