The number of rental contracts closed with surety bonds grew by 76% in 2020 and, up to the month of November, had collected more than R $ 813 million (according to the National Insurance Federation ). This is because it is less bureaucratic than other types of insurance, cheaper than the security deposit and makes the lease occur without a guarantor and quickly.
Below we list the main doubts that owners who rent directly have regarding this rental modality when renting their property, check out:
- How does rent guarantee insurance work?
- Is bail insurance legal?
- What is bail insurance?
- How much does rent insurance cost?
- What does bail insurance cover? IPTU, water, condominium, painting, etc?
- Documents for rent insurance?
- Advantages of surety bond for the tenant
- What are the disadvantages?
- Is bail insurance returned at the end of the contract?
- What are the differences between surety bond, CredPago, surety and guarantor?
- Commercial bail insurance, does it exist?
- What is the best insurance option?
How does rent guarantee insurance work?
Basically, the surety bond for rent works like this: When the tenant delays the rent, the owner contacts the responsible insurer and triggers the “claim” – much like auto insurance. Of course, you need to understand how it works specifically in each case.
The most basic coverage of the surety bond guarantee guarantees the payment of the rent to the lessor, but the policy may include several other coverages. It may include, for example, payment of condominiums left open, electricity bills, water, property tax, fine for early termination of the contract, damage to the property and even reimbursement of the damage caused by the tenant to the interior painting of the property. There are some insurance policies that also include locksmith and plumber services.
Is bail insurance legal?
The surety bond is a rental guarantee provided for in Art. 37 of the Tenancy Law (nº 8245/91), which determines:
Art. 37. In the lease agreement, the lessor may demand from the lessee the following guarantee modalities:
I – security deposit;
II – surety;
III – rent guarantee insurance.
Recalling that it is prohibited, under penalty of voiding the rental contract, more than one of the types of guarantee in the same lease.
What is bail insurance?
Guarantee insurance is a type of guarantee that replaces other types of guarantee, such as the surety bond or the guarantor.
How much does rent insurance cost?
The value of the surety bond can vary between 5 and 15% of the rent. This will depend on the degree of risk that the insurer understands that this contract will have.
As mentioned above, depending on each case, the value of the insurance may vary. But the normal is that its value does not exceed about 3 rents. Above all, the amount can often be paid in 12 installments, making it lighter to pay. In addition, the owner or tenant may request additional coverage, which will influence and add to the value of the bail insurance.
You can simulate the contracting of your surety bond using various calculators in the market.
What does bail insurance cover? IPTU, water, condominium, painting, etc?
Property expenses, such as water, electricity, property tax, condominium, painting (external and internal) and contractual fines, may also be covered by the value of the surety bond. In the midst of so many collection possibilities, it is necessary to check in your insurance policy if these coverages are added. It also covers possible expenses with the request to vacate the property, when necessary.
Documents for rent insurance?
When it is agreed that the guarantee of the lease will be the surety bond, owners and tenants need to send a series of documents to prove and contract the insurance. It is always good to check with the insurance company which documents will be requested, as it may vary depending on the tenant and the property. But, in general, the documents requested for hiring surety bonds for rent are:
- Identity card and CPF;
- Proof of income;
- Copy of the income tax return;
- Proof of address.
Advantages of surety bond for the tenant
Of course, everything varies from insurer to insurer and, again, it is necessary to consult which services are added in the contracted insurance. But in general, the benefits of bail insurance for the lessee:
- No guarantor or security deposit is required: as already mentioned, only one type of insurance is allowed per contract. Choosing bail insurance you do not need to ask friends or family to sign the rental agreement and do not have to pay the security deposit to enter the property.
- Speed for approval: The analysis of the bail insurance usually takes a few hours, so you can close the contract much faster.
- Enables installment payment in 12 installments
- Provides 24-hour assistance for emergency repairs and free facilities
What are the disadvantages?
Like everything in life, there are the downsides of opting for bail insurance. Here we will point out what they are:
- The amount paid is not refunded. Unlike the security deposit, the amount paid to the insurer does not return to the lessee or the owner at the end of the contract. The reason for this is that the contracting of insurance works as if the insurer occupies the role of guarantor in the rental contract. This amount will remain with the insurer at the end of the contract, in order to pay for any risks assumed by it in this process.
- More difficult to approve: Another negative point in this option is that the insurer may not approve the tenant’s documents, depending on the analysis made by the company. Insurance companies also carry out an income assessment, which can be a setback for freelancers.
- Coverage time: It is essential that the landlord and tenants pay attention to the term of coverage of the contract with the insurer. It is normal that it is necessary to renew the insurance every 12 months. That is, make the policy payment again to continue with the coverage.
Is bail insurance returned at the end of the contract?
No. As with other types of insurance, the amount paid for bail insurance is not refunded. This is because, as long as the policy is in force and the lease exists, the insurer is guaranteeing the risk.
However, if the tenant has made a cash payment for the insurance for the entire term of the lease and is terminating the contract before the deadline, an amount must be reimbursed. For example, if the tenant takes out the surety bond for the 24 months of rent, but has only been in the property for 8 months, a cancellation endorsement must be requested and the tenant will receive a refund for the missing months that he has already paid in advance.
What are the differences between surety bond, CredPago, surety and guarantor?
So far in this Blog text we have explained several things about bail insurance. However, this is not the only option on the market. We are seeing more and more insurance options and types of insurance. Here I will explain the most used ones:
- CredPago – It is a type of rental insurance that can be charged to the tenant’s credit card and brings a series of coverages to the owner. In the end it ends up being a bail bond with another name.
- Security deposit – Security deposit is the amount deposited in a bank account, which cannot exercise the amount three times higher than the rental amount, and will serve as a guarantee. There is another very nice text from our blog that explains only about the deposit for renting real estate.
- Guarantor – The guarantor is a person who has his own good and accepts to place it as a rental guarantee for the tenant. He must also prove a monthly income, at least, three times higher than the rent. Usually this property is the property, but real estate rental contracts can be made by placing another type of property, such as cars, boats or another item of value.
Check out in this blog post the 6 main types of rental insurance
Commercial bail insurance
Legal entities can also rent a space to carry out their activities with the facilities of commercial surety insurance. This type of insurance replaces the guarantor and offers extra advantages and guarantees, such as a single credit for headquarters and branches and agility in the leasing process.
What is the best insurance option?
The answer is: it depends. The best thing is to be able to rent your property quickly and to a good tenant. The rental guarantee helps to bring greater security and credibility to the contract. Analyzing the person interested in the Zimobi platform, you can verify you’re personal and credit data and can issue your contract in complete safety. In addition to Zimobi making the budget of the bail insurance in all the companies mentioned above to approve the interested party. In addition, you can close your rental with the option of a refundable damage deposit.