What is rental deposit insurance?
Rental deposit insurance (also called a rental deposit guarantee, Mietkautionsbürgschaft) is an alternative to the classic cash deposit. Instead of parking several months' rent in a deposit account, you pay an annual fee and receive a guarantee certificate for your landlord.
The principle is simple: an insurer vouches for you to the landlord. In the event of a claim the insurer pays the landlord first – you then have to repay the amount to the insurer. That way your money stays in your account and you remain financially flexible.
Without a guarantee
The deposit sits in the landlord's account – you have no access to it during the tenancy.
With a guarantee
You pay an annual fee and the deposit money stays available in your account – for furniture, emergencies or investments.
How high may the deposit be?
Under section 551 BGB the rental security may be at most three months' net rent (service charges do not count). With a net rent of €750 that is a maximum of €2,250. This ceiling also applies if you provide a guarantee instead of cash.
Advantages of the rental deposit guarantee
Keep your liquidity
Your money stays in your account – use it for furniture, moving costs or as an emergency fund.
Quick sign-up
With many providers sign-up takes a few minutes online; the guarantee certificate comes digitally or by post.
Legally recognised
The guarantee is a recognised form of rental security; the ceiling of three months' net rent under section 551 BGB applies to it as well.
Flexible to end
With many providers the guarantee can be ended at the end of the tenancy – check the terms for minimum terms.
Costs: what to look out for
The rental deposit guarantee is normally charged as an annual percentage of the deposit amount. Some providers charge a minimum premium, which raises the price for small deposits. The fee differs by provider; in the financeAds comparison calculator you can see the current terms for your deposit amount.
Also note:
- The fee is due every year for as long as the guarantee runs – even after you move out, until the original certificate has been returned.
- With a cash deposit you pay no fee, but the landlord must invest the money separately from their own assets, and the interest belongs to you.
- The comparison is therefore mainly worthwhile if liquidity matters more to you than the ongoing fees.
Is it worth it?
Weigh the annual fees against the length of the tenancy and the interest you could earn on the freed-up money. For the flexibility and liquidity it can be a fair price – but for a short tenancy and a small deposit the cash deposit is often cheaper.
What to look out for when choosing
- Guarantee with primary liability (selbstschuldnerisch): The landlord can turn directly to the guarantor for justified claims – landlords usually require this.
- Review by the guarantor: Find out whether the guarantor first checks the landlord's claims and whether you have a right to object.
- Minimum premium and term: Is there a minimum premium or minimum term?
- End of the guarantee: Usually only when the original certificate is returned – until then the fees continue.
- Form of the certificate: Digital PDF or original by post – some landlords insist on the original.
- Credit check: Most providers check your creditworthiness (e.g. via SCHUFA).
Do landlords accept the guarantee?
The rental deposit guarantee is a legally recognised form of rental security under section 551 BGB. However, the tenancy agreement governs which form of security is owed: if it states a cash deposit, the landlord does not have to accept a guarantee.
Our advice: talk to your landlord before signing up and explain how it works. Many private landlords do not know the guarantee yet but are open to it once it has been explained.
Important for landlords
A guarantee with primary liability is customary: for justified claims the landlord can turn directly to the guarantor without first having to pursue the tenant, and has no administrative effort with a deposit account. Still clarify acceptance in advance – there is no universal acceptance rate.
How signing up works
Ask whether a guarantee is accepted instead of a cash deposit.
Use the financeAds comparison calculator above and read the terms.
Name, address and deposit amount are usually enough.
The provider usually checks your creditworthiness (e.g. SCHUFA).
After payment you receive the guarantee certificate digitally or by post and pass it on to your landlord.
Alternatives to the rental deposit guarantee
Besides the guarantee there are other ways to provide the rental deposit:
- Cash deposit: The classic option – you transfer the deposit to the landlord. Under section 551 BGB you may pay a cash deposit in three equal monthly instalments; the first is due at the start of the tenancy, the other two with the following rent payments. The landlord must invest the money separately from their own assets at a bank, and the interest is yours. Downside: the money is tied up during the tenancy.
- Deposit savings account: A savings account in your name that is pledged to the landlord. Interest (if any) belongs to you. Not every bank offers such accounts – ask your own bank.
- Bank guarantee: Your bank vouches for you – usually more expensive and only available to very good customers.