If rental investment appeals to many French people, it is not without risks. Between water damage, potential damage caused by a tenant, its insufficient insurance or periods of vacancy and bad payers, a non-occupying owner must have solid cash and good insurance coverage.
Multiple potential dangers
When entering the premises, all tenants must take out multi-risk home insurance. It is a legal obligation. One would then think that the lessor does not have to take his own contract. However, that would be a mistake.
The Alur law of 2014 requires all co-owners, whether they are occupants or not, to ensure, at a minimum, their civil liability. In this situation, it is a question of protecting the lessor in the cases where his tenant could turn against him, namely for a construction defect, a lack of maintenance or a disturbance of use.
But this cover is far from sufficient anyway. For example, if water damage from an unknown source occurs while the apartment is unoccupied, the owner would be out of pocket. If this water leak affects the neighbor, it would also be up to him to pay. Finally, although the tenant's insurance in principle covers the damage it could cause, its guarantees are not always sufficient in the event of a major claim.
Preventing any claim
To prevent these different hypotheses, it is essential to take out non-occupying owner insurance, or PNO. At first glance, it is similar to the multi-risk housing contract, since its rental risk guarantee covers the accommodation, whether occupied or not, against all claims (fire, water damage, explosion, etc.). Likewise, it compensates if the built-in appliance or the furniture of the furnished rental is damaged. Civil liability, as well as remedies from neighbors and third parties, are also taken care of. The PNO includes, in addition, specific protections against construction defects, disturbance of use, lack of maintenance and recourse by tenants.
In addition to this base of guarantees, certain contracts include from the outset or as an option other coverages such as payment of costs if the owner has to go to the site, breakdown assistance services in the absence of a tenant, protection of the garden, compensation in the event of premature departure of the occupant, even a guarantee for unpaid rents. Non-occupant homeowner insurance costs between 50 and 180 euros per year, depending on the options chosen. But this sum is deductible from property income.
Make up for unpaid bills
Apart from claims, defaults by tenants remain the main bane of lessors. A few months of late rent or a departure with a wooden bell is enough to plunge small owners into destitution. To avoid this, it is preferable to take out an unpaid rent guarantee (GLI). As its name suggests, this insurance consists in reimbursing rents and charges not paid by the tenant. But it includes, in general, other protections such as taking charge of repairs if it has damaged the property or even procedural costs incurred to recover due from the owner. Depending on the contracts, it is even possible to receive compensation during periods of vacancy between two tenants, which is useful when you count on the rent to repay your mortgage.
Despite this attractive coverage, the GLI varies at all depending on the offers, and the methods of treatment can reveal unpleasant surprises to you. A rigorous comparison is therefore essential before any subscription. The price of this insurance usually fluctuates between 2 and 4.5% of the rent amount. Again, it is deductible from property income.
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