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Renting out a property in Portugal is one of the most common ways to generate passive income. But it is also an activity with real financial risks: a tenant who stops paying can cost the landlord months of lost rent, eviction costs, and property damage — in a process that can take more than a year.
Rent guarantee insurance (also known as GLI — Real Estate Lease Guarantee) exists precisely to eliminate this risk. This guide explains everything you need to know to make an informed decision.
What is Rent Guarantee Insurance?
Rent guarantee insurance is an insurance policy that guarantees the landlord receives the rent even when the tenant stops paying. In the event of non-payment, the insurance company pays the overdue rent directly to the landlord, and then handles the recovery of the amount from the tenant.
It is different from a guarantor or a deposit:
- A guarantor is a person who makes a personal commitment — but they may not have the ability to pay, they may dispute the debt in court, and their financial situation may change.
- A deposit typically covers 1 to 2 months of rent — insufficient to cover an eviction process that can last 6 to 12 months.
- Rent guarantee insurance covers the entire period of non-payment up to the eviction — usually up to 12 or 24 months, depending on the policy.
What It Covers (and What It Does Not Cover)
Standard coverages:
- Unpaid monthly rent from the 1st or 2nd month of default (waiting period)
- Legal and eviction process costs (fully or partially, depending on the policy)
- Property damage caused by the tenant (in policies with damage coverage)
- Attorney fees within the scope of the PED (Special Eviction Procedure)
Standard exclusions:
- Non-payment caused by a dispute initiated by the landlord (e.g., the tenant withholds rent due to uncompleted repairs)
- Contracts not registered with the AT (Tax Authority)
- Tenants with a history of default already known at the time of taking out the insurance
- First 1 to 3 months of waiting period after taking out the policy (varies by insurance company)
- Rents above the maximum limit defined in the policy
How Much Does It Cost? Prices and Comparison
The cost of rent insurance in Portugal typically varies between 2% and 4% of the annual rent value, depending on:
- Tenant’s risk profile (type of employment contract, rent-to-income ratio)
- Monthly rent value
- Included coverages (basic vs premium)
- Landlord’s claims history
Practical example:
For a rent of €900/month (€10,800/year), rent insurance with 12 months of coverage typically costs between €216 and €432 per year — that is, €18 to €36 per month. In contrast, the cost of an uncovered eviction process can easily exceed €8,000 to €15,000.
How Does the Payout Work?
The claims process for a GLI policy generally works as follows:
- The tenant misses 1 or 2 rent payments (grace period — varies by policy).
- The landlord reports the claim to the insurance company, attaching proof of non-payment.
- The insurance company verifies the claim report and, if valid, begins paying the rent to the landlord.
- The insurance company initiates the recovery process with the tenant (including PED, if necessary).
- Rents are paid up to the policy limit (usually 12 or 24 months) or until the property is recovered, whichever comes first.
With AluSeg, the average processing time for the first payment to the landlord is 30 days after the claim is reported.
Rent Insurance vs. Guarantor vs. Deposit
Comparison table:
- Deposit: covers 1–2 months · no additional costs · does not cover eviction · availability depends on the property’s condition
- Guarantor: theoretically covers the entire period · no cost to the landlord · difficult to enforce · risk of guarantor’s insolvency
- GLI Insurance: covers 12–24 months · annual cost of 2–4% of the rent · guaranteed coverage · automated claims process
How to Purchase Rent Insurance with AluSeg
- Visit aluseg.pt and create your account for free.
- Enter the property and tenant details (or use our guided onboarding flow).
- AluSeg performs an automatic tenant solvency check.
- Receive a personalized insurance proposal in minutes.
- Digitally sign the policy — you are covered from day 1.
No need to wait for the next lease: you can take out insurance for existing tenants, provided there are no rent arrears at the time of contracting.
