Hard Times Mean More Tenants, More Financial Risks for Landlords

02 Feb Hard Times Mean More Tenants, More Financial Risks for Landlords

Increased Demand for Rental Units

The financial crises in the U.S. employment sector, housing market and credit industry is creating new opportunities for the rental market. 

A large number of Americans are turning to home rentals as the more economical approach to housing.

The good news is that residential investment property owners have a much larger pool of tenant applicants to choose from, but the downside is that hard times also mean an increased chance of a tenant losing employment or relocating for a job.

Investment Properties can be Risky Business

Landlords face a number of financial pitfalls from tenants, including property damage, injury lawsuits and failure to pay their monthly rent.

Insurance will cover you against claims of physical property damage, bodily injury and personal injury lawsuits, but not for the risk that’s harder to predict, tenant default.

Till now, a landlord’s only defense was to run a tenant check and collect a security deposit.  Sadly, that doesn’t address the need when a tenant is in arrears for several months.

Should a tenant die, lose their job, abandon your property, relocate due to military service or simply stop paying the rent and need to be evicted—no matter what the situation, it ends up costing you money.  The mortgage, taxes and other property expenses don’t go away. 

All of which has turned many a promising investment property into a stress filled, financial nightmare for a landlord.

Introducing an Affordable New Solution

Unknown to most Americans, rent default insurance has been available in England, Australia and New Zealand for the past 20 years.  This unique policy protects residential investment property owners against the peril of tenant rent default.

The market leaders in rent default insurance overseas, Aon and QBE Insurance Group, brought this important new coverage, called Aon Rent Protect, to landlords in the United States starting in November 2011.

Now, should a good tenant fall on hard times, Aon Rent Protect can save landlords a substantial amount of money. The plan pays up to six months of lost rents due to tenant abandonment, eviction or nonpayment, up to three months’ rent due to the death of a tenant, hardship of a tenant or call-up to military service, plus up to $1,000 in legal expenses to help with the eviction process.

Times may be hard, but Aon Rent Protect can make a landlord’s business a lot less risky.

Kevin Morman is the senior vice president of program design and development at Aon Affinity.  Aon Affinity is the group program solutions division of Aon, that offers Aon Rent Protect to individual property owners.  For more information, please visit www.aonrentprotect.com.

All descriptions, summaries or highlights of coverage are for general informational purposes only. Please consult your policy for actual governing terms and conditions.