What insurance should you choose for a rental investment?
Do you want to invest in real estate in order to rent? Have you thought about choosing your insurance? This is important and allows you to protect yourself from multiple problems. Insurance for a rental investment, for what? What types of contracts exist? How do I subscribe? We answer these various questions.
Insurance for a rental investment: what for?
Buying real estate to rent it out is not without risks. It is therefore essential (but not obligatory*) to secure your investment in stone by taking out an insurance contract.
But what kinds of problems are we talking about? Unpaid rent, damage to your property and others. Unfortunately, it is not uncommon for landlords to find themselves in complicated situations with their tenant (s). In these moments, being insured allows you not to lose too much money or to be able to restore your property in good condition.
Among the insurance contracts that exist, GLI is the most common. It protects landlords in a variety of ways. It is even possible to subscribe to one or more options in order to optimize your protection.
Focus on the GLI
The most common protection for landlords is GLI, which is the guarantee against unpaid rent. Because, for 3% of properties rented, lessors face this problem.
Not only does the GLI protect against unpaid rent, but it also protects against the deterioration of the property or against the early departure of the tenant. But be careful, you cannot subscribe to a GLI who wishes to do so. The conditions are in fact often quite strict (employee status, permanent contract, income at least three times the rent...) and this insurance is incompatible with a deposit (excluding apprentices/ students). In addition, insurance coverage is limited — around 24 to 30 months — and the compensation ceiling is between 75,000 euros and 100,000 euros on average.
Litigation costs (eviction of the tenant, recovery of unpaid invoices, etc.) are generally covered by the GLI. Sometimes a refund limit is applied.
Legal protection is also generally included in the contract for the guarantee of unpaid rent. It is capped between 2,300 euros and 10,000 euros. What does it offer? In the event of actions/diligences exercised by the owner against the tenant or vice versa, the insurer assumes them at its own expense amicably or before a court.
If a real estate degradation guarantee is not included in your contract, but simply offered as an option, we strongly advise you to subscribe to it. Because, unpaid rent often goes hand in hand with housing damage.
PNO and GLR: what are they?
One PNO insurance (non-occupying owner) protects against all claims that may cause damage to installations and equipment, especially when the tenant's insurance is lacking or simply does not exist. It thus covers fires, explosions, water damage, glass breakage and others. In addition, it works in the event of damage caused by the home itself to the tenant (s), when there are construction defects or even non-compliance and damage to installations (gas or electricity).
The GLR — rental risk guarantee — offers, for its part, the same guarantees as the PNO, but also covers litigation costs and unpaid rent, including expenses.
In short, PNO is the basic coverage, GLR is the average coverage, and GLI is the insurance offering the best coverage.
How to take out insurance for a rental investment?
Do you want to rent a property and want to take out insurance? First and foremost, we recommend that you carefully inquire about the various contracts offered by the multiple insurance companies that exist.
Read all the terms and conditions associated with the various contracts, check which options are included and which are not included, compare rates and more. Sites offer online comparisons that will allow you to see more clearly and to get an idea of what is offered by the various insurances. You will thus be able to make your choice according to your needs and your budget.
Then, all you have to do is contact the insurance company of your choice and sign the contract that best suits your wishes.
Whichever insurance you choose, in case of a problem, make sure you present all the necessary supporting documents and respect the deadlines for reporting this or that problem.
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*If a tenant must, by law, take out home insurance, the occupying or non-occupying owner is not obliged to do so. However, this is highly recommended.
