Rent guarantee insurance has become an almost essential tool for landlords who let their properties. However, the growing popularity of this product has also attracted fraudulent companies that exploit landlords' concerns. Here is how to protect yourself.
What does rent guarantee insurance cover?
A legitimate rent guarantee policy typically includes:
- Unpaid rent cover: usually between 6 and 18 months of rent
- Legal defence: legal costs of the eviction process
- Vandalism: cover for intentional damage caused by the tenant
- Solvency assessment: prior analysis of the tenant's ability to pay
Warning signs: how to spot a fraud
These are the main signs that you may be dealing with a fraudulent insurance policy:
1. Prices that are too low
If the price is significantly below the market rate (under 3% of the annual rent), be cautious. A quality rent guarantee policy costs between 3.5% and 5% of the annual rent. Lower prices usually mean reduced cover or companies with no financial backing.
2. No solvency assessment
Any reputable insurer will carry out a solvency assessment of the tenant before accepting the policy. If you are told they will insure any tenant without prior verification, this is a clear sign of fraud.
3. Unregistered companies
Verify that the company is registered with the DGSFP (Dirección General de Seguros y Fondos de Pensiones). You can check this on their official website. If the company does not appear, it is not an authorised insurer.
4. Excessive upfront payments
Be wary if you are asked to pay the full annual premium upfront with no option to pay in instalments, particularly if the general policy terms are not provided before you sign.
5. Hidden clauses
Always read the small print. Some fraudulent policies include exclusions so broad that in practice they never cover a claim: excessive waiting periods, exclusions based on contract type, geographical limitations, and so on.
How to choose a reliable rent guarantee policy
- Choose recognised insurers: ARAG, DAS, Mutua de Propietarios, Mapfre, Allianz and Zurich are reliable options
- Compare cover, not just price: months of rent covered, legal defence included, damage cover
- Read the full general terms and conditions before signing
- Request the information notice that the insurer is legally required to provide
- Consult your property manager: as professionals in the sector, we know the best options available on the market
What to do if you have been a victim of fraud?
If you believe you have taken out a fraudulent insurance policy:
- Report it to the Policía Nacional or Guardia Civil
- File a complaint with the DGSFP
- Contact a consumer association
- Keep all documentation: contracts, receipts, and communications
At Fincas Caseuro we work with the most reliable insurers on the market and handle rent guarantee insurance for all our managed rentals. Contact us and protect your investment with real guarantees.