RGI - much of a muchness?

[chickpea]

When taking out RGI, is there anything you need to consider when choosing a provider - or are they all pretty much of a muchness?

We've spoken to a LA today who has said they will pay RGI and given us the details of the provider they use. Just wondering if there's anything we should be asking/looking out for.

[chickpea]

Anyone?

[Richlist]

Most rent guarantee insurers have their own strict set of criteria that prospective tenants need to meet in order to quallify for the cover. Don't assume that if an applicant passes the RGI criteria that the tenant is suitable to rent your property. DO carry out your own checks either personally or thru the agent to ensure they ALSO meet your set of requirements.

I only ever let to new tenants on a 6 month AST......or a 12 month WITH a 6 month break clause. Because of that I only ever take 6 month RGI. If the tenant stays on longer than 6 months I don't automatically renew the RGI unless there is a good reason for it.

There are quite a few agents who offer RGI for free as part of their 'package' now.....mine does. Many agents DON'T use a formal insurer, instead, they self insure. They can do this because they usually don't deal with benefits tenants and have strict rules on suitability. However, many make a charge after the first 6 months. You might like to check if they self insure & charge after 6 months.

[Melboy]

I personally have never used RGI or felt the need to have it but reading up on it I can see that it is a good insurance plan to have in place.

Anyone had cause to make a claim with hassle free success? I hope it's better than flood insurance.

I would certainly consider it in the future.

[Richlist]

Yes I've claimed.....just the once.

The tenant abandoned the property & disappeared during the fixed term of the tenancy agreement.......ex army guy who seemed to have psycological issues. My agents, who offered the RGI, paid out without undue delay.....both rent owed & deposit paid to me. Obviously we had to go through the abandoned property procedure first. I wasn't left to much out of pocket.....I don't remember how much but no more than a couple of hundred pounds.

If you take out RGI its a good idea to understand the T & C's. In my case the RGI doesn't cover the first months rents (as this is already paid upfront by the tenant prior to moving in). Neither is the last month covered. The last month is usually covered by the deposit that will be coming back to you. Whats covered is the bit in the middle.

On a scale of 1 - 10 I'd rate RGI as a 9/10 and flood insurance as a 5/10. Government promises regarding flood insurance I'd rate as a 0/10.......as they don't have a good track record.

[chickpea]

Thanks for the info, Richlist.

I looked at the provider the LA uses, and I can already see that there's a choice of with or without excess, so that's another consideration.

Regarding NOT being able to claim on the last month, how does this work with an AST clause that says the deposit cannot be used for rent. Also, what would be the situation if you needed to cover damage costs as well as rent with the deposit? Seems too easy to say use the deposit as rent as a reason not to be able to claim on RGI.

In our experience, unpaid rent has only become an issue at the end of the AST when the tenant has (mentally, at least) moved out.

Would you advise RGI and guarantor - or would either/or suffice?

[Melboy]

Would you advise RGI and guarantor - or would either/or suffice?

Go for both I would say because with RGI and a guarantor the legal cover of your insurance will be able to chase the guarantor in the event of a default ?

[Richlist]

Regarding NOT being able to claim on the last month, how does this work with an AST clause that says the deposit cannot be used for rent.

I've no idea. I can only tell you how my RGI works with my agents.

We use the tenancy agreement provided by The Law Society and as far as I'm aware it doesn't have such a clause in it. Its a pretty pointless clause anyway cos a deposit can and often is used to pay a landlord rent arrears.

Also, what would be the situation if you needed to cover damage costs as well as rent with the deposit? Seems too easy to say use the deposit as rent as a reason not to be able to claim on RGI.

You take the RGI with the T & C's on offer or you get it somewhere else or not at all.

Insurance of any kind has restrictions, requirements, limitations etc......its your choice.

Would you advise RGI and guarantor - or would either/or suffice?

Depends on how you view the risk.....I don't, never have, its always been one or the other.

You are unlikely to be able to affect cover that will pay you every out of pocket expense anyway. If you can limit your losses substantially for just small insurance premium then its a must as far as I'm concerned. For others, like you and me, who can get the cover at NO cost, its an easy choice.

[Grampa]

"an AST clause that says the deposit cannot be used for rent."

This clause is quite common in tenancy agreements and I believe it is to discourage tenants not paying the last months rent and saying "oh just take it out of the deposit"

But it cant be enforceable by either party because the AST is likely to state elsewhere that the deposit can be used for rent arrears and therefore both clauses contradicting each other.

Most tenants don't read the contact any way and if they choose not to pay the last rent payment they wont, regardless to what it states in the contract.

Be very wary of agents who self insure the rent (not a policy) there are a number of risks with this the obvious ones being what if they stop trading/go bust? The other being they are likely to be breaking FCA (formally FSA) regulations as they are probably not members so if they don't pay out there is no regulatory body to fall back on.