Rent guarantee insurance in Spain: Protecting landlords on the Costa del Sol

For property owners in the rental market, one of the biggest concerns is tenant default. Late or missed payments can impact cash flow, create legal complications, and even damage the property investment’s profitability. Fortunately, there’s a solution designed to protect landlords: Rent Guarantee Insurance.

This article explains what rent guarantee insurance is, how it works, and why it’s an essential tool for landlords renting out properties in Spain, particularly in competitive areas like the Costa del Sol.

What Is Rent Guarantee Insurance?

Rent guarantee insurance (also known as tenant default insurance) is a policy that covers landlords against the risk of tenants failing to pay rent. In most cases, it not only compensates unpaid rent but also covers legal costs associated with eviction proceedings.

In markets like Marbella, Estepona, Casares, and Manilva—where short‑term rentals and long‑term leases are common—this coverage can be a valuable safeguard for property owners.

How does it work?

When you take out a rent guarantee policy:

• The insurer will assess the tenant’s financial profile (employment, income, credit history).

• Once approved, the insurance is activated alongside the tenancy agreement.

• If the tenant stops paying, the policy compensates the landlord for the rent during the covered period and assists with legal proceedings to recover possession of the property.

  
  

Coverage typically includes:

• Unpaid rent (usually up to 12 months)

• Legal fees for eviction

• Court costs

• In some cases, property damage caused by the tenant

  
  

Why landlords should consider it

• Financial stability: Ensures a steady income stream even in the event of non‑payment.

• Peace of mind: Reduces stress and uncertainty in rental management.

• Legal support: Professional assistance in the event of disputes or eviction.

• Tenant quality control: The insurance company’s screening process adds an extra layer of tenant verification.

  
  

Key considerations for property owners

Before choosing a policy, landlords should review:

• Coverage limits (how many months of rent are covered)

• Excess or waiting periods before payments start

• Eligibility requirements for tenants

• Additional protections (e.g., damage coverage, vacancy loss)

  
  

Why it matters on the Costa del Sol

In popular rental markets like Marbella, Estepona, Casares, and Manilva, high tenant turnover—especially in short‑term rentals—can increase the risk of unpaid rent. A rent guarantee policy can be a crucial tool for:

• Owners who rent to long‑term tenants from abroad

• Landlords managing multiple properties

• Investors relying on rental income to cover mortgage or property management costs