What is a rent deposit insurance?
Paying a deposit for your flat can be a substantial financial burden, especially shortly after your arrival in Germany, when you would much rather spend the money on new furniture, basic equipment or office supplies for your studies. A Rent Deposit Insurance allows you to improve your liquidity immensely by freeing you from paying a deposit against a yearly premium, making your start into a new life much easier.
If you have ever been searching for a flat, you probably have stumbled upon the term “deposit” (“Kaution” or “Mietkaution” in German), wondering how this affects you.
Once you agreed upon a tenancy agreement, you will likely have to pay a deposit to the landlord. This is a sum you have to pay as a security for the landlord in case damages are caused to the flat and is paid back to you once you leave the flat again. It is, furthermore, used to cover any rental debts or claims for damages made against the tenant by the landlord. But the landlords can also use the deposit as compensation for outstanding rent or ancillary costs. How much you have to pay as a fee usually depends on your monthly rent and is specified in your tenancy contract. The landlord is allowed by law to demand a deposit worth up to three months of rent. This can result in a quite substantial payment you have to do if you want to move into your new apartment.
However, instead of paying the whole deposit on your own, you could also purchase a Rent Deposit Insurance, which would lower the financial burden on your shoulders significantly. For the Rent Deposit Insurance, you pay an annual premium instead of paying the whole rent deposit. In return, a guarantee certificate is issued which can either be sent directly to your landlord or to your new address in Germany for you to hand it to your landlord. If the landlord makes a claim, he will receive the requested money on first demand from the insurance underwriting agency. You are then obliged to pay back the full amount of the payment that was made to the agency. Aside from an increased liquidity for you, there are multiple additional advantages of a Rent Deposit Insurance.
General process of the Fintiba Rent Deposit Insurance & process in case of a claim
Your main advantages as a tenant are:
- The financial burden on you is reduced and you keep your liquidity
- You have the money at your disposal
- You don’t have to find another, potentially costly way to pay for the deposit
- Easy online application process
- Your creditworthiness is not reduced, as it would be when other institutions guaranteed for it
- No risk that the landlord does not pay back the deposit in time
- The guarantee certificate is issued within 2-3 working days
However, the Rent Deposit Insurance also offers a lot of benefits to your landlord, namely:
- No bureaucratic effort in contrast to the administration of a deposit account
- In case of a damage, the landlord receives his money quicker and less complicated
- Due to the customer assessment of the company, an own credit assessment by the house owner might not be necessary
Please take a look at the following example calculation for a Rent Deposit Insurance for a total deposit of € 1,000.
€ 1,000.00 rent deposit * 5% annual insurance fee = € 50.00 per year
Got you interested?
For more information on the Fintiba Rent Deposit Insurance click here.