Rent guarantee insurance — also called rent protection insurance or tenant default insurance — pays the landlord's rental income if the tenant stops paying rent and covers the legal costs of possession proceedings. With the abolition of Section 21 on 1 May 2026, possession through the courts takes significantly longer than before, making rent guarantee insurance more valuable than ever for landlords with mortgaged properties. This guide explains how policies work, what they cover, and what to watch out for.
Why rent guarantee insurance matters more in 2026
Section 21 is gone. The Section 8 possession process through county court now takes 4–8 months from first missed payment to eviction. During that time, a landlord with a mortgage is paying the lender but receiving no rent. Rent guarantee insurance bridges that gap — typically covering rent for 6–12 months during proceedings and all legal costs.
What rent guarantee insurance covers
- Rental income: Monthly rent payments to the landlord — typically from the 2nd month of arrears (1-month excess is standard) and for up to 6–24 months depending on the policy
- Legal expenses: The cost of Section 8 possession proceedings — court fees, solicitor fees, bailiff fees — up to a specified limit (typically £50,000–£100,000)
- Eviction costs: The cost of instructing a High Court Enforcement Officer if County Court enforcement is too slow
- Rent voids post-eviction: Some policies also cover a short void period (typically 1–3 months) while the property is re-let after eviction
- Property damage: Some comprehensive policies include tenant damage cover in addition to rent guarantee — check the policy schedule carefully
What rent guarantee insurance does not cover
- Pre-existing arrears: Any arrears that began before the policy was taken out (or renewed) are excluded — the policy covers defaults that arise during the policy period
- Tenants who fail referencing: Most policies require the tenant to have passed a full credit and reference check using an accredited referencing agency at the start of the tenancy — if not, the policy may be void
- Rent above the insured amount: Check the maximum insurable monthly rent — most policies cap the cover at £2,500–£3,500/month. High-value properties may need specialist cover
- Deliberate underpricing to evade tax: If the rent is set significantly below market rate for tax purposes, the insurer may not pay the face rent
- Tenancy agreement breaches: If the tenancy agreement does not meet the insurer's requirements (e.g. no break clause restrictions, using the insurer's approved form), the claim may be rejected
How to qualify for rent guarantee insurance
- Tenant referencing: The tenant must have been fully referenced using an accredited agency (credit check, income verification, employment reference, previous landlord reference) — most insurers specify which agencies they accept
- Tenancy agreement: The tenancy agreement must be in a form acceptable to the insurer — most require a standard AST (or from May 2026, a Periodic Assured Tenancy) with no unusual clauses
- Right to Rent check: The tenant must have passed a Right to Rent check at the start of the tenancy
- Deposit protection: The deposit must be properly protected in an authorised scheme with Prescribed Information served
- Policy purchase timing: Most policies must be purchased within 30–90 days of the tenancy start date — not retrospectively when arrears arise
- Renewal: On tenancy renewal (or conversion to a new periodic tenancy), re-check with the insurer whether cover needs to be renewed or whether it continues automatically
Choosing a rent guarantee insurance policy
- Cover period: Choose a policy that covers rent for at least 12 months — the Section 8 possession process from first missed payment to eviction can take 6–8 months in 2026, and re-letting adds another 1–2 months
- Excess: The standard excess is 1 month's rent — the policy kicks in from the 2nd month of non-payment. Some policies have a cash excess instead
- Legal expenses limit: Ensure the legal expenses limit is at least £50,000 — possession through the County Court is expensive, and High Court enforcement adds further costs
- Claims process: Check how quickly the insurer pays out once a claim is accepted — some policies pay within 30 days of the missed rent; others take longer
- Combined policies: Many landlord building insurance policies include optional rent guarantee cover as an add-on — compare combined vs standalone policies on both cost and cover
- Section 21 abolition — updated policies: Since May 2026, some insurers have updated their policies to reflect the longer possession timeframe — check that the policy's maximum cover period is adequate for the new Section 8-only process