Rent Default Insurance for Landlords Catching On

by | Mar 5, 2012 | Rental Property Management Tips

Insurance provider Aon is expanding availability of rent default insurance into a number of states. The rent protection program reimburses landlords for lost income when tenants default on rent payments.

Traditional property and casualty insurance plans provide coverage for lost rent due to physical damage exposures such as fire or hurricane, but do not address the risk of tenant default.

“Rent default coverage has been sold overseas for years, but has not been available in the U.S. until now,” said Kevin Madden, managing director of the Real Estate practice at Aon Risk Solutions. “We are excited to offer this crucial management solution to residential and multifamily property owners and managers.”

Initially launched in California, Colorado, D.C., Ohio and Pennsylvania, the product is now available in Arizona, Arkansas, Idaho, Michigan, Rhode Island, Tennessee, and Wisconsin. Coverage will soon be available in all 50 states.

“This is a game changer for anyone who owns or manages a residential rental property,” added Kevin Morman, senior vice president of program design and development at Aon Affinity. “When tenants default on the rent, it can take months for landlords to regain their property and seek out another tenant. Meanwhile, landlords must continue paying mortgage and additional expenses. Aon Rent Protect helps relieve this cash flow nightmare.”

Aon and its underwriter, QBE,  have tailored the product to address all sectors of the residential rental property market.

For individual rental property owners,  Aon provides rental income replacement for up to six months and assistance with legal expenses such as attorney fees to help with the eviction process.  Annual premiums start at $250 per rental unit.  A referral program is available for property management and real estate companies with landlord clients that would benefit from the new product.

Aon’s Rent Protect program helps manage financial balance sheet risks for large property investment firms by allowing the firm to limit its total liability, ensuring rent default losses are mitigated and hedged. This program is available now across the U.S.

“No offering in the U.S. market currently provides adequate protection for landlords against tenants defaulting on their rents,” said East Coast Regional Vice President Joel Laventure at QBE the Americas. “This product will offer peace of mind to landlords, who are heavily reliant on consistent rent payments from their tenants to maintain their investment.”

Aon and QBE have provided tenant rent default insurance in Australia, the UK and New Zealand for the past 20 years.

This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).

Click Here to Receive Landlord Credit Reports.

Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

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