Real Estate

Does anyone have experience with Rent Guarantee insurance for landlords?

  • Last Updated:
  • Jun 9th, 2021 12:10 pm
[OP]
Sr. Member
Aug 13, 2006
793 posts
567 upvotes
Ottawa

Does anyone have experience with Rent Guarantee insurance for landlords?

Single Key for example has this program. It takes about 5% of rental income to enroll. I know they pause this program during lockdown (meaning you are not covered during that period) but once it's over it should be resumed.
Does anyone have personal experience with such programs?
11 replies
Deal Guru
User avatar
Mar 23, 2008
12669 posts
9281 upvotes
Edmonton
eugene_2005 wrote: Single Key for example has this program. It takes about 5% of rental income to enroll. I know they pause this program during lockdown (meaning you are not covered during that period) but once it's over it should be resumed.
Does anyone have personal experience with such programs?
You know why they offer this program? Because they make money at it. They make money at it because they collect more money than they pay out.

In many things in life, we have the choice to self-insure or purchase insurance. If you can't afford to self-insure (i.e. it would be difficult to afford a new fridge if your fridge dies), then it's important to get insurance. Paying out a little every month is easier to handle than coughing up $2k all at once when your food is rotting in the fridge.

This rent guarantee is the same way. In the end, you're likely to have paid out more than you collect. But if you've got concerns over maintaining your cash flow if you don't have a renter for a month or two. But you'd likely be better off to either get your own insurance or put aside 10% of your rental income every month to cover expenses like that.

C
Jr. Member
Jan 26, 2020
179 posts
130 upvotes
CNeufeld wrote: You know why they offer this program? Because they make money at it. They make money at it because they collect more money than they pay out.

In many things in life, we have the choice to self-insure or purchase insurance. If you can't afford to self-insure (i.e. it would be difficult to afford a new fridge if your fridge dies), then it's important to get insurance. Paying out a little every month is easier to handle than coughing up $2k all at once when your food is rotting in the fridge.

This rent guarantee is the same way. In the end, you're likely to have paid out more than you collect. But if you've got concerns over maintaining your cash flow if you don't have a renter for a month or two. But you'd likely be better off to either get your own insurance or put aside 10% of your rental income every month to cover expenses like that.

C
at 5% of $3000 rent m collecting , I will be paying $1800/year . If they pay out $18000 (6 months rent ) and Court cost in case a tenant screws up.. I’ll take it in an instant
Member
Dec 23, 2012
473 posts
466 upvotes
RICHMOND HILL
CNeufeld wrote: You know why they offer this program? Because they make money at it. They make money at it because they collect more money than they pay out.

In many things in life, we have the choice to self-insure or purchase insurance. If you can't afford to self-insure (i.e. it would be difficult to afford a new fridge if your fridge dies), then it's important to get insurance. Paying out a little every month is easier to handle than coughing up $2k all at once when your food is rotting in the fridge.

This rent guarantee is the same way. In the end, you're likely to have paid out more than you collect. But if you've got concerns over maintaining your cash flow if you don't have a renter for a month or two. But you'd likely be better off to either get your own insurance or put aside 10% of your rental income every month to cover expenses like that.

C
I think it's a little more complicated than that with rentals. similar to a home insurance policy, not having it can be catastrophic. in some extreme cases (which unfortunately aren't uncommon enough), loss of rental income for 12+ months as is possible in Ontario can also be catastrophic. with a fridge, the max damage is pretty minor, and if cashflow is an issue you can buy a cheaper one, used one etc. the value of rental insurance like this comes from the randomness of the downside, much harder if not impossible to plan for on an individual level.
Deal Guru
Feb 22, 2011
10697 posts
13412 upvotes
Toronto
CNeufeld wrote: You know why they offer this program? Because they make money at it. They make money at it because they collect more money than they pay out.

In many things in life, we have the choice to self-insure or purchase insurance. If you can't afford to self-insure (i.e. it would be difficult to afford a new fridge if your fridge dies), then it's important to get insurance. Paying out a little every month is easier to handle than coughing up $2k all at once when your food is rotting in the fridge.

This rent guarantee is the same way. In the end, you're likely to have paid out more than you collect. But if you've got concerns over maintaining your cash flow if you don't have a renter for a month or two. But you'd likely be better off to either get your own insurance or put aside 10% of your rental income every month to cover expenses like that.

C
I wonder if it would help with cashflow, it probably takes a long time to file a claim and receive the funds. That's what really sucks about insurance. You have to pay everyone month and they pay up to a year later.
[OP]
Sr. Member
Aug 13, 2006
793 posts
567 upvotes
Ottawa
mazerbeaner wrote: I wonder if it would help with cashflow, it probably takes a long time to file a claim and receive the funds. That's what really sucks about insurance. You have to pay everyone month and they pay up to a year later.
Actually Single Key provides an option to pre-authorized debit tenant's bank account and pay you rent that way. They also claim if tenant stops paying and they cannot debit his/her account they will continue paying you rental and start eviction process on their own.... It sounds too good to be true that's why I am looking for people with real life experience in that.
Deal Addict
Jul 30, 2015
2967 posts
1978 upvotes
Toronto, ON
Sounds like a wicked deal for just 5 percent.
Deal Addict
May 12, 2014
3036 posts
2852 upvotes
Montreal
"Program is available across Canada but not in Quebec"


I wonder what happens if the tenant is 10 days late and asks for patience due to " valid reason X"? As an owner, you might be willing to do this. But as an insurance company their incentive might be to evict as quickly as possible.
Jr. Member
Jan 26, 2020
179 posts
130 upvotes
naborly used to have similar program as well, but they suspended it last year (march 2020)
Member
Apr 15, 2009
258 posts
263 upvotes
toronto
If it’s 5% that means their calculation is the following:
On 20 clients they make 1 full rent. Delinquency rate must be much lower. I would guess 1% or lower. So they make 5 payments from landlords and lose at most one due to non payment. On large scale good business. Also not a bad deal for landlord since as if you find that 1% non paying renter you can really be in trouble.
Member
Apr 15, 2009
258 posts
263 upvotes
toronto
Quick search shows My assumption is right:

Toronto recorded the highest arrears rate, with 10.68% of units (34,858) in arrears and 0.92% of rent (approximately $55 million) in arrears. Among all provinces, Ontario posted the highest arrears rate in Canada, with 10.18% of apartment units and 0.81% of rent (approximately $87 million) in arrears as of October 2020.

So 0.92% worst case in worst possible Covid year.

https://www.cmhc-schl.gc.ca/en/blog/202 ... ket-report
Newbie
Jun 8, 2021
1 posts
Hey @[eugene_2005], I'm curious if you decided to reach out to Single Key and what it was like working with them. Did you end up going forward with a rent guarantee? Thanks!

Top