Paying tenant default insurance could be an option to consider if you own property in Spain and are worried about the possibility of tenants not paying rent or falling into default. There is a rise in this country of these types of insurances on the lessor’s part. In fact, a common requirement to rent property is for the insurance company to give the tenant their approval. This post will analyse some factors to be taken into account by owners:
1. Financial risk: Evaluate how much financial risk you are willing to take on. If you rely on renting property to cover costs such as a mortgage, taxes, or maintenance, a tenant default insurance will provide you with additional coverage should renters not pay.
2. Tenant’s history: We advise to always conduct a thorough background and solvency check on a tenant before renting. Good payment history and referrals can reduce any default risk.
3. Insurance cost: Study the insurance payment against its coverage. Some insurances may cover part of the unpaid rent or even include legal fees linked to eviction.
4. Coverage and exclusions: Review insurance terms and conditions in detail to know exactly which circumstances are covered and which are excluded.
5. Emergency fund: You can opt to not pay the insurance and accept any risk yourself if you have an emergency fund sufficient to cover default costs.
6. Professional advice: If you have any questions or need a more accurate examination of your personal situation, think about talking to a financial adviser or an insurance agent to obtain personalised recommendations.
Remember each situation is different, therefore it is vital you come to a decision according to your specific circumstances and risk tolerance. For that matter, Tecnotramit can help you with all procedures and legal advice you need as a property owner and offer a personalised consultancy service.