Rent guarantee cover has been under scrutiny for its performance during the pandemic. Agents offering this service to their landlords may risk losing the trust of their customers with the wrong policy, so here are four things to consider when making the choice.
Rent Protection Insurance is designed to bring landlords and letting agents peace of mind, covering a loss of income if a tenant’s unable to pay rent. This peace of mind was shaken by the pandemic, and so-called "eviction bans".
Only a few providers, Goodlord among them, were able to offer a continued service by adapting to the changing circumstances. To make sure you’re protected against changing circumstances, here are some things to consider when choosing a rent guarantee insurance policy to offer to your customers.
Understand the policy - and the current legislative context
Agents should ensure they fully understand the details of the policies they offer their landlords - and how government legislation may affect the coverage. For example, policies covering six months of rental arrears are returning to the market, despite the reality that court closures and backlogs mean most cases will take far longer to resolve. The question estate and letting agents should be asking now is not “do you provide rent protection?” but “ what type of rent protection do you provide?”
Monitor costs and factor them into your pricing
As agents can choose to factor insurance products into their own customer proposition, you should make sure you’re aware of any potential fluctuations in your costs. The stay on courts has increased the cost of a claim and this is having an effect on the amount agents can expect to pay for a comprehensive policy - alongside any standard increases to policy pricing. The market has also seen material pricing decisions made and launched overnight. You should keep your landlords up to date on the situation so any price increases you may have to pass on do not come as a shock.
Know your rights in the claims process
As with any insurance product the real judgement comes at the point of claim. Providers are held accountable in a regulated environment to deliver on the promises made within the policy wording a policyholder and insurer have agreed to. Providers can’t simply fail to pay a claim when they should, unless there’s a basis to do so. That basis is down to the specific underwriter or policy wording in question - so agents need to make sure they fully understand the wording of the policy they’re offering in case a second wave of the virus brings further disruption.
The future of rent protection insurance
The data shows that early signs are positive for rent guarantee cover: arrears haven't reached the heights many predicted and the majority of tenants and landlords have worked together to mitigate risk. The government confirmation that the stay on courts will now be lifted at the end of August has reassured insurers and there’s an increased demand for insurance products as landlords recognise their importance.
So now is the time for letting agents to assess and to choose the best policy to offer their customers; products should be judged side by side on their benefits. Not all rent protection policies are the same.
CASE STUDY: Goodlord and DAS UK Group
From the moment the lockdown was announced, shortly followed by the stay on court proceedings and an extension of notice periods, Goodlord and DAS UK Group made a series of collaborative decisions to continue to provide Rent Protection and Legal Expenses Insurance cover throughout the pandemic - while maintaining complete transparency in communications to customers around all the measures taken.
DAS UK Group moved to remote working, with zero employees furloughed; evolved the initial claims handling processes to help agents and landlords reach mutually beneficial agreements with their tenants; created the processes needed to pay valid rent arrears claims through the Covid-19 period, for both new and existing claims; and assessed the impact of the crisis and created models to keep offering cover at a fair and reasonable price.
Goodlord provided extra support for agents when they make a claim to significantly reduce the overall risk. This involved augmenting the pre-claims process to help landlords and agents to work with tenants through mediation and financial assessments - as per the government guidelines. The success of this approach means that this will now be a feature of any claim filed with Goodlord, even beyond the pandemic.
