What surety insurance is
Surety insurance (seguro caução) is a policy by which an insurer guarantees to a beneficiary that someone else will meet their obligations. It is a distinct class of non-life insurance, long used for construction contracts, public tenders and commercial leases.
In a residential lease there are three parties:
- The tenant is the policyholder: they apply for the guarantee and pay the premium.
- The landlord is the beneficiary: the insurer pays them if the tenant defaults.
- The insurer assesses the tenant, issues the guarantee up to a set amount and for a set period and, if it pays, can ask the tenant to reimburse it.
The most misunderstood point: surety insurance does not cancel the tenant's debt. If the insurer pays rent arrears to the landlord, the tenant then owes that amount to the insurer. It is a guarantee, like a deposit or a guarantor, not protection for the tenant.
Deposit, guarantor, bank guarantee or surety insurance
| Guarantee | Who provides it | Cost to the tenant | If the tenant does not pay |
|---|---|---|---|
| Cash deposit | The tenant | Up to two months' rent tied up, returned at the end | The landlord keeps the amount owed at the end of the lease |
| Guarantor (fiador) | A third party (relative, friend) | No cash, but someone must agree | The landlord claims from the guarantor, under the guarantee terms |
| Bank guarantee | A bank | Fees and, often, a blocked deposit | The landlord calls the guarantee with the bank |
| Surety insurance | An insurer | A premium, usually yearly, not refunded | The landlord calls the guarantee with the insurer |
| Rent insurance | Taken out by the landlord | Nothing: the landlord pays | The insurer compensates the landlord, within the policy limits |
Guarantees are not mutually exclusive. A landlord can ask for more than one, as long as the cash deposit respects the legal limit. Details in security deposit and guarantees.
Legal limits: deposit and rent paid in advance
Under the wording in force, a cash deposit cannot exceed two months' rent, and the parties can agree in writing to the advance payment of up to two months of rent (Civil Code, article 1076). A clause requiring more is, as a rule, void for the part above the limit.
For the tenant, the appeal of surety insurance is not tying up that money at the start of the lease. For the landlord, it is having a solvent third party guaranteeing the lease. See also the deposit's legal limit.
How much surety insurance costs
The insurer prices the premium from the amount guaranteed, the duration and the tenant's profile (income, stability, history). Unlike a deposit, it is not refunded at the end of the lease: it is the price of the guarantee. Always ask for the offer in writing, with the total premium for the whole duration of the guarantee.
The market in Portugal
For residential leases, surety insurance offers for individuals are still rare in Portugal: the product is more common in commercial leases and business guarantees. Many tenants without a guarantor rely instead on a higher deposit within the legal limit, a bank guarantee or a strong application file. The alternatives are in renting without a guarantor.
What the landlord should check
- The insurer is authorised to operate in Portugal: check the public register of the Insurance and Pension Funds Supervisory Authority (ASF).
- The beneficiary is the landlord, with the correct name and NIF, and the lease is identified.
- The amount guaranteed covers the risk you want to cover: how many months of rent, and whether property damage is included.
- The duration follows the lease, with a margin for the end of the tenancy and the handover of the keys.
- The claim conditions: what you must prove, within what time, and whether the guarantee pays on first demand.
- The premium is paid for the current period: ask for proof.
Assess the applicant the same way, with or without a guarantee: the solvency calculator measures the rent-to-income ratio in two minutes.
Surety insurance or rent insurance?
Both protect the landlord against rent arrears, but they are not the same product. With surety insurance, the tenant takes it out and pays. With rent insurance, the landlord takes it out and pays, and chooses the covers (rent, legal costs, damage). See the unpaid rent insurance guide and rent insurance vs. guarantor vs. deposit.
Informational, not legal or insurance advice. Aluseg does not sell insurance. Source: Civil Code (article 1076), wording in force in October 2026.