Rent Guarantee Break-Even Calculator

Rent guarantee insurance is sold as cheap protection. This calculator breaks even premium against probability-weighted payouts.

Monthly rent

Annual premium

Claim probability %

Expected claim months

Expected value

-$190

Expected claim payout

$660

Break-even probability

7.73%

How the math works

Expected value = claim probability × claim value − premium. Positive means insurance pencils out.

Don't insure small portfolios with low-risk tenants — friction costs eat return. Insure when claim probability exceeds break-even by 2-3x for meaningful risk transfer.

How to Use

Enter monthly rent.
Enter annual premium.
Enter claim probability per year.
Enter expected claim months.
Read expected value.

Frequently Asked Questions

Worth buying?

Yes when probability × expected claim > premium × 1.3 (adding friction cost). For stable properties, rarely breaks even. For higher-risk tenants, makes sense.

Typical premium?

2-5% of annual rent. Covers 6-12 months of rent with 30-60 day deductible. Most claims come from evictions and unit vacancy during legal process.

Alternative?

Self-insure by holding 2-3 months rent in reserve per unit. Cheaper for portfolios with 20+ units where losses smooth. Small portfolios benefit more from insurance.

What documentation matters here?

Written leases, move-in/move-out inspections with photographs, ledger entries showing every payment and charge, served notices with proof of service, and contemporaneous emails or texts. Courts weigh written evidence heavily; informal understandings rarely stand. Institutional operators run a monthly file audit to catch gaps before they matter. Good paper trails recover most of what's owed.