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Rent Guarantee Insurance

Author

Listed:
  • Boaz Abramson
  • Stijn Van Nieuwerburgh

Abstract

Rent guarantee insurance (RGI) provides tenants with insurance against nonpayment of rent. We introduce RGI in a quantitative equilibrium model of housing insecurity and show it increases welfare by improving risk sharing across idiosyncratic and aggregate states, reducing the need for large security deposits and reducing homelessness that imposes large costs on society. While unrestricted access to RGI is not financially viable because of moral hazard and adverse selection, restricting access can restore viability. Private insurers target better-off renters, while public insurers focus on households most at risk of homelessness. Stronger tenant protections increase the effectiveness of RGI.

Suggested Citation

  • Boaz Abramson & Stijn Van Nieuwerburgh, 2026. "Rent Guarantee Insurance," Journal of Political Economy, University of Chicago Press, vol. 134(9), pages 2557-2601.
    • Handle: RePEc:ucp:jpolec:doi:10.1086/742422
    DOI: 10.1086/742422
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    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G5 - Financial Economics - - Household Finance
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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