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I've read about the Dlighted insurance policy which works as replacement for a deposit but also as rent guarantee insurance which includes legal cover. The cost is what appears to be a very reasonable £129 per year. To be honest it seems too good to be true so does anyone have any experience of this or similar?
This is really interesting.
As it offers a real material benefit to the tenant ie no deposit, does anyone think we could just charge the tenant the premium on a monthly basis?
It would then benefit in three ways:
You could offer tenants two choices
What does everyone else think?
Landlord with 25 years’ experience in the property market and a specialist in tenant referencing, ID and credit screening. Creator of identity, credit and anti-money laundering system ValidID.co.uk
Not sure. If you proposed it like this it could be argued the £12 a month was a deposit of some form.
Most RGI claims are rejected if the claimant has failed to comply with every piece of referencing as they deem it etc.
It is possible to obtain RGI without being compliant with a RGI claim process.
RGI companies usually then state that the referencing is inadequate even though they accepted the policy to start with!!!
As with any insurance claim it takes time to receive any money for any deposit or RGI claim.
There is really nothing like having cold hard cash from a tenant as a deposit in your bank account.
I would doubt the efficacy of such an insurance product.
However as far as I am aware it would be perfectly possible to have both.
So have the DLighted insurance policy and also retain a conventional deposit and normal RGI policy
You could pay for the normal RGI etc and have the tenant pay for the deposit insurance.
The tenant wouldn't need to know you have a separate RGI policy.
Then when you need to claim try the DLighted policy.
Most conventional RGI policies have a 90 day claim submitting period.
So this would enable a test claim on the DLighted policy.
If it didn't work the conventional RGI policy could be claimed on.
Some of these type of deposit insurance schemes have proven to be a sham.
Combine that with a loss of rent payout and the insurance company is setting themselves up for an average £12000 of losses bearing in mind it can take 42 weeks to evict.
That is a massive financial risk for an underwriter to take for a £120 odd premium.
They would fund such viability by rejecting most claims.
Conventional RGI policies are normally covered by DAS which has a white label product that is used by many different RGI companies.
If DLighted has a connection with DAS then fair enough as DAS has deep pockets!
You're right Paul there is nothing like having cold hard cash. If nothing else it means that the tenant has some skin in the game and that always sorts the wheat from the chaff.
I only posed the question above to see what everyone else thought but I have had much experience of no deposit and I find it does filter the wrong type of tenants. IMHO
Better to have the deposit I think. Agree with Chris the deposit vets the tenant to some degree and they know they have something to lose.
Insurances are designed to not have to pay out either because you don't meet their criterias or that the likelyhood of it being required to pay out is very low.