Rent guarantee insurance: cover and cost
Rent guarantee insurance pays the landlord the rent that a tenant fails to pay, normally for a period of six to twelve months, and covers the legal costs of recovering possession, in exchange for a premium of around four to six per cent of the annual rent.
gelisted editorial team · Updated 15 August 2026
The short version
- The premium is typically 4 % to 6 % of the annual rent.
- Cover usually runs for 6 to 12 months of unpaid rent.
- The insurer screens the tenant before the policy is issued.
- Legal costs of recovering possession are normally included.
The premium looks like an expensive month. The alternative is 12 months of no rent and a legal bill, and that comparison is the whole product.
What it covers
Unpaid rent from the moment of default, normally up to a stated number of monthly payments. The legal costs of the recovery proceedings, including lawyer and court representative. In many policies, malicious damage caused by the tenant above the deposit, and a legal defence extension. The cover starts once a formal default is declared, typically after 1 or 2 months of non payment.
| Element | Usual position | Note |
|---|---|---|
| Premium | 4 to 6 % of annual rent | on 14,400 € rent, 576 to 864 € |
| Months of rent covered | 6 to 12 | some products to 18 |
| Legal costs | included | recovery proceedings |
| Malicious damage | often included | above the deposit |
| Waiting period | 1 to 2 months of default | |
| Tenant income requirement | rent under 35 to 40 % of net income | |
| Contract length | annual, renewable | |
| Existing arrears | excluded | must be a new tenancy |
The tenant has to pass
The insurer screens the applicant before issuing the policy: employment status, payslips or tax returns, contract type, and a check against debt registers. A common threshold is that the rent must not exceed 35 to 40 per cent of net income. That screening is itself part of the value, because a tenant the insurer will not accept is a tenant worth thinking twice about.
When it is worth it
When the rent is a material part of your income rather than a supplement. When you live abroad and could not manage a recovery process at close range. And on any letting where the mortgage on the property depends on the rent arriving. Recovery proceedings for non payment commonly take 6 to 12 months, during which the landlord receives nothing and still pays community fees, IBI and insurance.
On an annual rent of 14,400 €, a premium of 720 € buys protection against a loss that in a 10 month process reaches 12,000 € plus costs.
What to check
The number of months covered and whether the count starts at the first missed payment or after the waiting period. Whether legal costs are capped. What the policy requires you to do and by when, since late notification is a common ground for reduction. Whether the tenancy must be registered or the deposit lodged for the cover to be valid. And whether the policy renews automatically with the tenancy or must be re underwritten.
Frequently asked
+What does rent guarantee insurance cost?
Around 4 % to 6 % of the annual rent, so 576 € to 864 € on a rent of 14,400 € a year.
+How many months does it pay?
Usually 6 to 12 months of unpaid rent, with some products extending to 18.
+Are legal costs included?
Normally yes, covering the proceedings to recover possession.
+Will the insurer accept any tenant?
No. The tenant is screened, and a common threshold is rent below 35 to 40 per cent of net income.
+When is it worth taking?
When the rent matters to your finances, when you live abroad, or when a mortgage depends on it.
Sources
- 1Boletín Oficial del Estado, BOE (August 2026)
- 2Instituto Nacional de Estadística, INE (August 2026)