13. Protection Against the Non-Payment of Rent in France

1. 13.1. Rental/Demage Deposit
   13.2. Insurance
   13.3. Government Rental Guarantee
   13.4. Guarantor

13.2. Insurance Against Non-Payment of Rent on a French Rental Property

One of the most easiest and effective ways of securing the rent is for a landlord to take out insurance against the non-payment of rent.

The policy also covers the legal costs associated with legal proceedings against the tenant, although with some policies, this may be an optional extra.

The policy will not normally cover the first months arrears of rent but, as an insurer will consider that this is covered by the depot de guarantie.

The cost of the cover is between 3% and 5% of the rental, which is tax deductible.

Cover can be arranged through one of the main banks such as Credit Agricole, BNP/Paribas, Credit Lyonnais, or directly with insurance companies such as Generali or Natio Assurance.

Some of these contracts are only available through managing estate agents, although others are available direct to individual landlords.

In the first instance, try asking your own bank or insurance company because some companies only offer cover to existing clients.

Inevitably, this rule is going to reduce the number of potential tenants capable of accepting the tenancy on these terms, but it may be better to accept a lower rental than take a tenant without the insurance.

The insurance company may wish to see proof of income, so this condition does pose a problem of application if the prospective tenant is unwilling or unable to provide such proof.

It may be a particular problem in relation to prospective tenants from overseas. You will need to discuss with your insurer the information they are going to want to see, before you commit yourself to the letting.

If you are seeking insurance for an existing tenant then, provided they have paid their rent satisfactorily for at least a year, the rule on ratio of rent to income may be waived – check with your insurer.

The insurance company will impose a ceiling on the level of the rent that will be covered, although this ceiling should normally meet most requirements.

The duration of the cover will also be limited to between 18 and 36 months rent, and it may also only apply if the property is the main residence of the tenant.

In addition to insurance against the non-payment of rent the policies also offer additional options, such as assistance with legal costs to take possession proceedings, insurance against loss of rent for a property that becomes vacant, damage to the property by the tenant, and insurance in the event of death of the tenant.

There are also a number of insurance companies that offer insurance to tenants although the conditions are strict – good health, secure job, maximum rent/salary ratio.

The insurance will cover death, incapacity loss of job, divorce.

However, be prepared to look around to get the best deal and read the conditions with care!