What is a guarantor insurance?

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Guarantor insurance, also known as guarantor protection insurance, is a type of insurance policy that provides financial protection to landlords or lenders in the event that a tenant or borrower defaults on their payments. This insurance is typically used in situations where the tenant or borrower has a limited credit history or is considered to be a higher risk.

How Does Guarantor Insurance Work?

When a tenant or borrower is unable to meet their financial obligations, the guarantor insurance policy kicks in to cover the outstanding rent or loan payments. The guarantor, who is usually a family member or close friend of the tenant or borrower, acts as a co-signer for the lease agreement or loan contract. By agreeing to be a guarantor, they are legally responsible for making the payments if the tenant or borrower fails to do so.

Benefits of Guarantor Insurance: Guarantor insurance provides several benefits to both landlords and lenders. For landlords, it offers peace of mind knowing that they have financial protection in case the tenant defaults on their rent payments. This can be particularly valuable when renting to individuals with limited credit history or unstable employment.

For lenders, guarantor insurance reduces the risk associated with lending to borrowers who may have a higher likelihood of defaulting on their loan payments. This allows lenders to offer loans to individuals who may not otherwise qualify based on their credit history alone.

Cost of Guarantor Insurance: The cost of guarantor insurance varies depending on several factors, including the amount of coverage required and the perceived risk of the tenant or borrower. Insurance providers will typically assess the creditworthiness of the tenant or borrower and the guarantor before determining the premium for the policy.

Who Can Be a Guarantor?

While the specific requirements may vary depending on the insurance provider, there are generally a few criteria that a guarantor must meet. Firstly, they must have a good credit history and a stable income. This ensures that they have the financial means to cover the payments in case the tenant or borrower defaults.

Secondly, the guarantor is typically required to be a UK resident. This is because the insurance policy is designed to cover properties located in the UK, and having a guarantor who resides in the same country simplifies the process of enforcing the policy if necessary.


Guarantor insurance provides landlords and lenders with financial protection in case a tenant or borrower defaults on their payments. By having a guarantor who agrees to be legally responsible for making the payments, landlords and lenders can mitigate the risk associated with renting or lending to individuals with limited credit history or higher risk profiles.


1. Money Advice Service: Guarantor loans and guarantor mortgages – https://www.moneyadviceservice.org.uk/en/articles/guarantor-loans-and-guarantor-mortgages
2. Rentguard: Guarantor Insurance – https://www.rentguard.co.uk/guarantor-insurance/
3. MoneySuperMarket: Guarantor loans – https://www.moneysupermarket.com/loans/guarantor-loans/
4. Experian: What is a guarantor? – https://www.experian.co.uk/consumer/guides/what-is-a-guarantor.html