Hand a landlord any insurance policy and watch where they turn first. Not the coverage page. The exclusions.
It's the right instinct. A rent guarantor is only worth what it pays on the worst month of a lease, and the exclusions tell you which months those aren't.
So here is the full list for PandaGuarantee’s surety bond. It has just one item.
What is the one exclusion?
If the apartment becomes legally uninhabitable, rent from that point isn't covered. Think of a fire that guts the unit, or a flood that makes it unsafe to live in.
The exclusion follows New York law. Under Real Property Law § 227, when a building is destroyed or damaged so it's "untenantable and unfit for occupancy," and the tenant didn't cause it, the tenant can give up the apartment and stop owing rent from that date. When the tenant owes no rent, a guarantor has nothing to pay.
That loss belongs to a different policy. Many landlord property insurance policies offer loss of rents coverage, which pays while a damaged unit is being rebuilt. If your policy doesn't include it, ask your broker. A rent guarantor protects you from a tenant who won't pay. Property insurance protects you from a building that can't be lived in.
Does it matter why the tenant stopped paying?
No. The tenant lost a job, got sick, went through a divorce, or just decided rent was optional. None of that changes your claim. PandaGuarantee doesn't ask for a hardship story before it pays.
That matters more than it sounds. Most defaults start with a life event. A credit check at move-in can’t see a layoff or a hospital stay coming a year later. Yet a study of NYC and Chicago housing court records found that falling earnings, lost jobs and rising hospital visits are what typically come before an eviction filing.
This is the main reason that landlords are requiring a third party guarantor for more and more of their new leases. It’s free protection to landlords for the biggest risk they bear when considering a new renter.
Rent guarantee coverage also runs past the last day of the lease. If a tenant refuses to leave, PandaGuarantee includes up to 4 months of holdover coverage, so the bond can include unpaid rent while you work to get the unit back.
Can the tenant cancel the bond after move-in?
No. Once the lease is signed, the tenant can't cancel the PandaGuarantee bond. It stays in place for the lease term, whether the tenant pays every month or stops in month three.
This closes the loophole landlords worry about most: a tenant who qualifies with a guarantor, moves in, then quietly pulls the protection. That can't happen here. We explain why in Can a Tenant Cancel a Rent Guarantee After Move-In?
What happens when you file a claim?
You file the claim online. Approved claims are paid in 3 business days.
PandaGuarantee notifies the tenant when you file, and once the claim pays, it handles recovery from the tenant itself. You don't chase the tenant for the money you've already been paid. For the details, see our guide to lease guarantor claims.
What are the exclusions in a personal guaranty?
A personal guaranty has no exclusions page. That doesn't mean it has no exclusions. They're just unwritten, and you find them when you try to collect.
It may not cover the next lease. In Paganini v. 40 W. 127th St. LLC (2022), a Manhattan appeals court held that residential guarantors were liable only for the original lease term. The tenants signed new leases later, and the guaranty didn't follow them. Guaranties are read strictly, so a missing renewal clause can cost you.
It's worthless if it isn't signed. New York law voids an oral promise to pay someone else's debt.
You can't use it in Housing Court. A nonpayment case can't decide a guarantor's debt, so collecting takes a second lawsuit.
It depends on one person's life going well. If the guarantor loses a job, files for bankruptcy, or dies, you become one creditor among many.
With PandaGuarantee, the exclusion is written down, and there is only one. We cover the vetting side in Should NYC Landlords Accept a Personal Guarantor?
Read the exclusions before you need them
Ask any guarantor you accept, personal or professional, the same question: what are the cases where you won't pay? With PandaGuarantee, the answer is one sentence long. The bond is free to you, the tenant can't cancel it, and approved claims are paid in 3 business days.
Register your building with PandaGuarantee and send your next applicant an invite.
Frequently asked questions
What does a rent guarantor not cover?
PandaGuarantee has one exclusion: rent after the apartment becomes legally uninhabitable, for example after a fire or flood. Under New York law, a tenant in that situation can surrender the unit and stop owing rent.
Will a rent guarantor pay if the tenant lost their job?
Yes. PandaGuarantee doesn't need a reason for the default. Approved claims are paid in 3 business days.
Can a tenant cancel a rent guarantee after signing the lease?
No. Once the lease is signed, the tenant can't cancel the PandaGuarantee bond. It stays in place for the lease term.
Does a personal guaranty cover lease renewals in New York?
Not always. A 2022 Appellate Division decision held that residential guarantors were liable only for the original lease term when the later leases weren't express renewals.