Rent guarantee cover is taken out by landlords to protect themselves from the default of rent payments from their tenant. This could be from the tenant vacating the property without notice and not paying the remainder of their contract, or the tenant being unable to keep up with rent payments due to being made redundant, something that is happening more and more in this economic crisis.

Because of this, more and more landlords are searching for this as an add-on to their landlord building and contents insurance. It is often required to have reference checks or guarantors in place for this sort of cover. This type of cover is sometimes referred to as loss of rent cover, which predominantly it is, but this is not actually the case.

Loss of rent cover is normally covered under a standard landlord building insurance policy and therefore not a separate add-on like rent guarantee normally is. The loss of rent cover under a buildings policy is for the rent that is lost from a claim for an insured peril.

For example, a flood could render the property uninhabitable and consequently the tenant would move out while the property is repaired. The loss of rent during this period is then paid as part of the claim (or in some cases the tenant would continue to pay rent and the insurance pays out for the alternative accommodation instead).

It is always therefore best to call the rent covering policies by their correct name. If contacting an insurance company, keep this in mind as if the wrong term is used, you may think you are covered for something that you later find out is not when it is probably too late.