The rising popularity of rental deposit insurance: a financial expert explains.

The rising popularity of rental deposit insurance: a financial expert explains.

According to a report from www.blick.ch,

Rising costs and general inflation in Switzerland are not least responsible for the increased popularity of rental deposit insurance. In the last ten years, the premium volume for rental deposit insurance has increased by 80%, from 112 to 201 million francs. This boom is surprising because rent deposit insurance for tenants is significantly more expensive than conventional rent deposits in a bank.

With rental deposit insurance, tenants pay an annual premium based on the amount of the deposit, and this money is independent of whether financial claims arise after the end of the tenancy. The insurance company pays out in the event of damage, but then demands the amount back from the tenant. In the worst case, the insurance can eat up more than half of the rental deposit over ten years.

Rising rents and inflation reduce the liquidity of the financially disadvantaged, who often cannot afford a cash deposit and are therefore dependent on rental deposit insurance. However, experts still recommend saving a cash deposit after taking out rental deposit insurance, if possible, in order to be able to cancel the deposit insurance again.

Landlords sometimes have incentives to push for rental deposit insurance. You tend to have less administrative work and may receive financial compensation from insurance companies if they arrange for you to take out rental deposit insurance. In addition, large real estate companies and administrations actively promote rental deposit insurance. What is often left out is that a rental deposit is the cheapest option.