How does rental deposit insurance work and who should use it? How is AdunoKaution positioning itself for the future? Find out in this interview with AdunoKaution CEO Thomas Christen.
Thomas Christen is CEO of AdunoKaution, an Aduno Group subsidiary.
How does rental deposit insurance work?
A rental deposit guarantee is a modern form of rental guarantee which replaces the need for a conventional deposit. Renters can take out a rental deposit guarantee instead of placing a deposit equal to up to three months of rental payments in a bank account.
In exchange for an annual premium, AdunoKaution puts down the required deposit on the renter’s behalf. The guarantor (in the case of AdunoKaution and Generali) pledges to pay the landlord up to the full deposit stipulated in the rental agreement.
Rental deposit guarantees are suitable for both private and commercial rental agreements. They can be taken out for all residential and business properties in Switzerland. Landlords receive rental deposit guarantees for rental agreements in the form of surety pledges. From a legal perspective, the rental deposit guarantee is an insurance agreement between the insurer (Generali) and the renter and a pledge from the insurance provider to the landlord.
Is rental deposit insurance a genuine insurance product?
A rental deposit guarantee replaces a traditional deposit and covers claims such as outstanding rental payments and damages to rental property on behalf of the renter. However, renters are required to repay Generali up to the full extent of claims in arrears.
What type of renter would you recommend rental deposit insurance to?
All renters who prefer to invest their money in more clever ways. Instead of tying up money in a blocked bank account, renters can invest the money or use it to cover the costs of the move. This gives renter more financial flexibility. A rental deposit guarantee gives landlords the exact same level of security which they receive from conventional rental deposits, but eliminates the need to open a rental deposit account at a bank. Regular private renters generally want to keep their assets liquid rather than tying them up in a low-interest bank account. Businesses can also benefit from keeping assets readily available and investing them in more useful endeavors.
When is a rental deposit guarantee a poor choice?
A rental deposit guarantee is a poor choice for renters who do not need the deposit money for other purposes over a long term.
What should one consider when taking out a rental deposit guarantee?
Because a rental deposit guarantee is not insurance in the conventional sense of the word, getting additional personal liability insurance which covers the cost of damages to rental property is recommended.
Damage claims can then be directed to your personal liability insurance provider when you move out. However, personal liability insurance does not cover outstanding rental payments or supplementary charges.
Can businesses take out rental deposit insurance?
Yes, rental deposit guarantees are suited to both private and business rental agreements and can be taken out for all residential and commercial properties in Switzerland. The businessKaution policy from AdunoKaution is designed for small and medium-sized enterprises which want to use a rental deposit guarantee instead of putting down a deposit for commercial property rentals. The policy is guaranteed by Generali.
What sets AdunoKaution apart from its competitors?
AdunoKaution positions itself as a “fair pricing” insurer in the rental deposit insurance market. Renters only pay premiums for the effective rental term.
What exactly does that mean?
Other service providers charge annual premiums based on calendar years. If a renter moves into a rental home in November, for example, they still have to pay the full annual premium even though they only live in the rental home for two months of that year. The next annual premiums is charged in January of the following calendar year.
AdunoKaution, on the other hand, charges annual premiums based on anniversary years, which means the annual premium paid covers the next 12 months from the time the policy takes effect. From the second policy year, AdunoKaution reimburses the unused part of premiums when renters terminate their rental agreement before the end of the insurance term. This sets it apart from other service providers.
Does AdunoKaution sell its products through cantonal, regional or Raiffeisen banks? Where can one take out AdunoKaution policies?
We work closely with out shareholder banks and partner banks. Our policies are already available at seven banks. This number will increase in the future.
You took over Smartcaution in 2016. What is the background behind the takeover.
Previously we have largely focused our efforts on German-speaking Switzerland. The takeover has allowed us to diversify our geographic base and expand into French-speaking Switzerland. The takeover was an important step in implementing the group’s strategy of establishing a countrywide presence.
How would you rate the Swiss rental deposit insurance market?
We see two very different markets here. Rental deposit insurance is well-established in French-speaking Switzerland, minimizing the need to inform the public about the product. In German-speaking Switzerland we have a long way to go in that regard. On the whole, we see a growth market for rental deposit insurance which is not saturated and has a lot of room for development.
Where do you picture AdunoKaution in 5 years?
In the mid-term we want to position ourselves in second place in the Swiss market. To achieve that we work to differentiate ourselves by delivering high-quality products and exceptional service. Our digital approach to offering our customers simple and fast service is currently a top priority.
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