Rent protection insurance comes to Illinois

Beginning at the start of this year, insurance company Aon, through a subsidiary known as Affinity Insurance Services, Inc., has been offering an interesting product to landlords known as “Aon Rent Protect“.  A representative of Aon Rent Protect who I spoke with indicated that this is an American version of a product that Aon has sold in Europe for many years.  While I have not had a client who has had first hand experience with the policy, the suggested protections are intriguing.

The promotional website for the insurance product indicates the following coverages, all with a deductible equal to one month’s rent:

Tenant abandonment of unit – up to 6 month’s rent
Loss after eviction of tenant – up to 6 month’s rent
Tenant stops paying rent – up to 6 month’s rent
Death of tenant – up to 3 month’s rent
Tenant obtains court order terminating lease – up to 3 month’s rent
Tenant called up for active military duty – up to 3 month’s rent
Legal expenses for eviction – up to $1,000

The cost for an Aon policy varies depending on the monthly rent amount but a policy on a property with a monthly rent of $1200 is quoted to be $250.

In order to qualify for a policy, the landlord needs a current lease in place or month to month lease that has been in force at least 3 months, for tenants in the rental property less than 12 months, the landlord needs to obtain a tenant background check, and the policy need not be purchased at the very beginning of the tenancy.

The sample policy, like most insurance policies, has a number of exclusions from coverage, mostly dealing with avoidance of coverage when the landlord is not abiding by the lease or a building or zoning code.

The policy does not, of course, protect a landlord from tenant damage to the rental property, however, with all of the dangers presented to landlords who take security deposits, especially within municipalities like Chicago and Evanston, rent protection insurance may be a viable alternative to providing some protections to landlords who pass on the opportunity to collect a deposit.

While I don’t have enough first hand knowledge to “endorse” these sorts of policies, I am glad that alternatives to security deposits are entering the market.

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One Response to Rent protection insurance comes to Illinois

  1. Bryan Kinsey says:

    Thank you for sharing about Aon Rent Protect with your readers. Just to add to your comments above, Aon is the world’s largest insurance broker, and together with the underwriting company QBE, have put together the Aon Rent Protect residential rent default insurance program that is currently available in 22 states, including Illinois. Aon and QBE both have over 20 years of experience offering this coverage in the UK, Australia and New Zealand. I would encourage your readers to visit our website at http://www.aonrentprotect.com or call us directly at 1-888-722-2172 with any questions.

    The process to apply for coverage is simple online application, and policy documents are issued immediately. Depending on whether the tenant has been in place for over a year or not, there are a few simple eligibility qualifications to purchase the insurance. No tenant information is needed to complete the application. An annual policy costs $250 (approximately $21/month) for one residential rental unit with a monthly rent of up to $1,200 a month. The insurance pays up to 6 months of rental reimbursement following a one month deductible (waiting period) and up to $1,000 of eviction related legal expenses.

    Any landlord who has experienced an eviction knows that it can take several months to evict the tenant and get a new tenant in place. Aon Rent Protect not only pays the loss of rental income until the new tenant is in place, but also reimburses eviction related legal fees up to $1,000. Until now, residential landlords did not have a means to insure against the risk of tenant non-payment of rent, but now there is a solution – Aon Rent Protect.

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