Simple: The deposit for the landlord's security

Finance your rental deposit: Easily possible with this insurance

Shortly after my apprenticeship, I decided to move out of my parents' house and look for my own apartment. As I had no experience, I was overwhelmed as a young person because I was faced with a lot of new issues.

I had to decide which town or village I wanted to live in. How big the apartment should be and whether I would move in alone or with a colleague.

When I found a nice apartment in Starrkirch-Wil, I received the rental contract from the landlord with a deposit of three months' rent for the apartment. This meant that I had to pay CHF 3,000 if I wanted to rent the apartment.

The rental deposit insurance

Rental deposit insurance is a sensible alternative to the classic rental deposit, where an annual premium is paid to an insurance company instead of a large sum of money.
This protects liquidity, as no large sums are blocked, and allows the money to be used for other expenses or investments.
Insurance can be a particularly recommendable solution for tenants who want to retain their financial flexibility. It offers the same protection as a traditional deposit and makes it easier to start a new tenancy.

Of course, as a young person, you don't have 3 months' rent on the side so that you can pay this deposit straight away.

What is rental deposit insurance?

Rental deposit insurance is an alternative to the traditional rental deposit that tenants have to pay to their landlord. Normally, a landlord requires a deposit of up to three months' rent when a tenancy agreement is signed. This deposit serves as security for the landlord in case the tenant does not pay the rent or causes damage to the property.

With rental deposit insurance, you can replace the deposit by taking out insurance that offers the landlord the same security without you having to put the money down directly.

What are the advantages?

Liquidity: You do not have to pay the deposit as money into an account, but instead pay an annual premium to the insurance company. This means that you can use your money for other purposes.
Security for the landlord: The landlord receives a guarantee from the insurance company, which steps in in the event of damage or outstanding rent payments.
No or small one-off payment: You don't have to pay a large sum all at once, but can pay the premium in smaller annual amounts.

What are the disadvantages?

Costs: The premium for rental deposit insurance is an annual amount that is non-refundable. Unlike a traditional security deposit, you get nothing back at the end of the tenancy.
Long-term costs: Over many years, the premium can be more expensive than the deposit paid, as you pay for the insurance every year.

How does it work when I take out insurance?

You take out rental deposit insurance with an insurance company or a specialized provider.
The insurance company issues the landlord with a certificate of guarantee, which serves as security.
You pay an annual premium to the insurance company.

Who offers such insurance?

There are several providers that offer rental deposit insurance, including banks, insurance companies and specialized companies.
Insurance can be a sensible option if you don't want to raise the funds for a deposit immediately or want to use the money elsewhere.

After making detailed enquiries, I took out insurance with my bank. The annual premium was around CHF 120 per year. After the landlord received the guarantee certificate and I signed the rental agreement, I received the keys to the apartment at the end of September.

When the new furniture was also delivered, I was able to enter my new home at the beginning of October and I felt like I was in 7th heaven!

Also important when moving into your first home: household contents and personal liability insurance

When you move into your first home, always remember to take out household and personal liability insurance.

Protects your belongings in the event of fire, water, glass or theft. A must if you care about your possessions.
Covers damage that you accidentally cause to others. Highly recommended, because mishaps happen quickly.