Bond Insurance: What It Is and How It Works

 

Bond Insurance: What It Is and How It Works

Have you ever heard about safe bail? Do you know what it means and how it works? This type of insurance is used for anyone who wants to rent a property. That's because the landlord needs a guarantee that the tenant will comply with the obligations, such as the rent payment.

The surety insurance replaces the guarantor for those people who do not have one. But what is surety bond, in fact? It's like a monthly rent paid by the tenant who does not have a guarantor. In addition, it is intended to cover all costs that arise if the rent is not paid.

The surety bond has advantages for both the tenant and the owner

Another advantage of this type of insurance is that it also offers full coverage of possible expenses such as damage to the property. In addition to charges, fines and even termination fees.

It is also worth noting that the surety bond is regulated by specific rules, including the Tenant's Law, which defines and limits lease guarantees. The general rules of insurance were established by Resolution No. 202 of 2008 of the National Council of Private Insurance (CNSP).

Understand how surety insurance works

Now that you know what is a safe guarantee, it's time to know how it works. Just like in a car insurance, in this type of insurance you can also choose complements for the coverage of the property. Thus, there is the possibility of covering the condominium and the IPTU, for example.

The surety bond can be considered more interesting than a guarantor because it establishes greater security for both sides. This is because when a guarantor is used, the value of three rents is requested to cover possible losses. That way, if the property is damaged and the tenant can not afford it, the owner will use the security deposit to cover the expenses.

However, if the value of the loss is greater than that left in collateral, the owner of the property will have to bear all expenses. With the insurance, the guarantee is much more solid for the owner, even if the condominium is not paid by the tenant. In these cases, the owner is still charged for the administration of the property and has to assume more this expense.  

Who hires the surety insurance: owner or tenant?

This is a common question for anyone who is considering hiring this type of service. As the owner requires a certain amount to be presented, the tenant is insured.

Typically, for individuals, the required documents are:

  • Identity;
  • CPF;
  • Copy of the Income Tax;
  • Copy of the last three rent receipts (if you already live in the property);
  • Proof of income.

For legal entities, the necessary documents are:

  • Social contract;
  • Copy of the Income Tax;
  • Balance sheets and balance sheets for the last two financial years.

Advantages of Surety Insurance

For this type of service to be considered good, it needs to meet the needs of both sides, both tenant and real estate.

Check below the advantages for each one.

Tenant

  • The search for a guarantor is not necessary;
  • Greater agility in the approval of the contract;
  • Prevents the immediate disbursement of the insurance;
  • The amount to be paid can be parceled out;
  • There is a progressive discount on renewal of insurance;
  • Some insurers offer extra coverages for renters;
  • Possibility of legal assistance of the insurer;
  • Greater speed in receiving the value of the rental of the property by insurance;
  • Lease guarantee until the end of the contract;
  • Eliminates the risk of professional guarantors;

Additional coverage of property damage to property.

Real Estate

  • The analysis of the registration is dispensed with and is carried out by the insurer;
  • Possibility of legal assistance of the insurer;
  • The certainty of receiving the rent guarantees the regularity in the receipt of the administration fee of the property;

There are several insurance brokers specializing in the field.

Amount of surety bond

Are you interested and want to get a bond insurance? So, you must be curious to know what the value of this type of service is. Typically, the price is usually two to three times the value of a month's rent of the property.

However, unlike the deposit check for rent, insurance bond is not paid at once. It can be divided into 12 installments corresponding to one year of contract. Therefore, it needs to be renewed annually, due to the adjustments that may arise. Even with the possibility of splitting the insurance amount, the tenant can also choose to pay the amount in a single installment.

But it is up to the broker to make that immediacy and see if it is advantageous or not, and whether it is possible to make that alternative for both parties.