Alabama Landlord Insurance

Experts break down landlord insurance costs, coverages, companies, and more.

Landlord woman relaxing in her Alabama apartment. Find Alabama landlord insurance.

Maybe you own a condo in Birmingham that you lease to local executives. Or perhaps you own a house in Tuscaloosa that you rent out to students attending the University of Alabama. Regardless, if you own a property that is occupied by tenants, you can benefit from having landlord insurance.

Independent agents are available to help you find a good landlord insurance policy. These agents can get you customized quotes from some of the best insurance companies in Alabama. That way, you can be sure you are getting the coverage you need at a competitive price.

Contact an insurance agent near you to get more information.

What Is Landlord Insurance and How Much Does It Cost in Alabama?

Landlord insurance is a type of homeowners policy that is designed specifically to meet the unique coverage needs of property owners who lease to tenants.

On average, landlords in Alabama spend about $1,083 a year on their landlord insurance policies.

You can expect your landlord insurance policy to cost about 15% to 25% more than it would to insure the same property with a traditional homeowners policy. This is because, as a landlord, you have greater liability and property damage risks when your property is occupied by renters.

Why Own a Rental Property in Alabama?

Some residents of Alabama are able to earn extra income by leasing homes or business spaces to tenants.

  • Percentage of homes that are renter occupied in Alabama:  31.2%
  • Average market rent in Alabama: $792

Investing in rental properties in Alabama can be extremely lucrative. However, it is not without its risks. Protecting your property with a reliable landlord insurance policy increases your likelihood of seeing large profit margins.

Is Landlord Insurance Required in Alabama?

Whether or not you need to purchase a landlord insurance policy depends on how you use your property and which insurance company you use.

  • If you have tenants occupying your property for a month or longer, most homeowners insurance companies will require you to have landlord insurance instead of home insurance.
  • If you have occasional tenants staying in your home for short-term rentals, you may be able to get coverage through an endorsement on your home insurance policy.
  • If you frequently rent your home to short-term tenants, such as if you have it listed on VRBO or Airbnb, you probably won't be able to cover it with home or landlord insurance. Instead, you may need to buy a business insurance policy.

If you are uncertain about how you should cover your particular property, you can consult a financial advisor or local insurance professional for assistance.

How Does Alabama Landlord Insurance Cover Property Damage?

Home insurance policies offer structural (dwelling) coverage and personal property (contents) coverage. With traditional homeowners insurance policies, the contents coverage is usually about 75% of the dwelling coverage amount.

However, as a landlord, you will have lower contents coverage needs than you would if the property was your primary residence. This is because your tenants will be responsible for covering their own personal property with a renters insurance policy.

You will only need to cover the structure of the house and any of your own property that is inside it, such as flooring, appliances, and light fixtures.

Your policy can cover your damage caused by the following.

  • Severe weather events: This can include damage caused by hazards like hurricanes, tornadoes, severe storms, high winds, and hail.
  • Accidental fires: This can include damage caused by fires accidentally started by your tenants and by wildfires.
  • Your tenants (accidental): If your tenants unintentionally damage your home, such as may happen when moving furniture or if they accidentally overfill the bathtub, the damage can by covered by your policy.

Your policy will not cover damage caused by the following.

  • Your tenants (intentional): If your tenants purposely damage your property out of spite or in retaliation for an eviction, most landlord insurance policies will not cover the damage. You will instead need to sue the tenant to get compensation.
  • Floods: As with homeowners insurance, flood damage is not covered by landlord insurance. To be covered, you can supplement your landlord insurance policy with a flood insurance policy through the National Flood Insurance Program (NFIP).
  • Normal wear and tear: Your policy will cover damage if it is caused by a covered event, but not if it is a normal part of aging. For instance, if the appliances you keep in your rental home break down or if the windows start getting drafty, you will need to cover repair or replacement costs on your own.

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Why Do Alabama Landlords Need Liability Coverage?

Rental properties present landlords with a high risk of facing a liability lawsuit. This is one of the reasons why landlord insurance is so important.

Landlord liability insurance, which is a standard part of every landlord insurance policy, is designed to cover expenses like court costs, legal fees, mediation costs, settlements, and judgements if you are sued for a covered event.

This coverage can come in handy if your tenants or their guests are injured on your property and it can be attributed to negligence in upkeep on your part.

This can be a tricky situation for landlords since they are often not notified about potential problems in their rental units but may then be held liable if those problems result in injuries.

Some problems that might lead to costly liability lawsuits include loose stair treads, carbon monoxide leaks, or fires caused by faulty wiring in the home. If you wish to have more liability coverage than your landlord insurance policy can provide, you can get it through an umbrella insurance policy.

How Does Loss of Income Coverage Help Alabama Landlords?

Loss of income coverage is another important part of your landlord insurance coverage. Most insurers include this as a standard part of their landlord insurance coverage, but some require you to purchase it as an endorsement.

Landlord loss of income insurance can cover your revenue losses if your property is severely damaged by a covered event like a tornado and you are unable to have renters inhabit it until repairs are made.

What Else Can Alabama Landlord Insurance Cover?

Landlord insurance is designed to enable landlords to secure their properties and their rental businesses. To help, many insurance providers will over a few coverage options you can include in your policy. 

Here are some coverage options you may come across.

  • Non-occupied dwelling coverage: If your property is unoccupied for more than a month, some insurance companies will not honor claims for damage that occurs while the home is vacant unless you have purchased this coverage.
  • Building code coverage: If you own an older property, building codes may have changed since it was built. If your property is damaged and extra repairs are necessary to bring it up to code, this insurance will cover the additional renovation costs.
  • Guaranteed income coverage: This can cover your losses if a tenant defaults on making rent payments. Your policy can cover the lost income for a set period of time, which will usually be long enough for you to complete the eviction process. Rates are based on the creditworthiness of your renters.

Be sure that you understand the various coverage options available to you so that you purchase a policy that suitably protects the investment you have made in your rental property.

How Can an Independent Agent Help with Finding the Best Landlord Insurance in Alabama?

If you want to be certain that you are getting your landlord insurance at a great price, you will need to do some comparison shopping. Independent insurance agents in Alabama can save you time and money by doing the legwork for you.

These agents can also offer guidance and advice, answer your coverage-related questions, and help you with any other insurance coverage needs you may have. Best of all, it doesn’t cost anything to consult one of these local professionals. Find an insurance agent near you to get started.

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