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Alabama is one of the country's most landlord-friendly states- with affordable housing and a solid rental market. That said, parts of the state bring significant risks that put rental property owners in a tricky situation.
Luckily, Alabama landlord insurance exists to cover expenses and provide peace of mind. Here is everything you need to know.
The Cost of Rent and Landlord Insurance in the US
Before getting into insurance for rental property in Alabama, let's take a quick look at prices for the country as a whole.
Currently (including listed asking prices for vacant properties), the average rental cost is around $1,970 per month. Comparatively, the national average landlord insurance quote is $2,100 per year.
All things considered, it is a small price to pay for the protection it offers.
Bear in mind that these figures are rough averages and should not be taken as an estimate of what you are likely to pay. Individual prices for rent and rental property insurance vary significantly based on location, value, size, condition, and much more.
What Is Alabama Landlord Insurance?
In a nutshell, Alabama landlord insurance is a policy that covers rental properties from financial loss resulting from unexpected damage.
It is designed specifically for people who own investment properties and rent them to others- as independent landlords or as part of a larger property management company.
Because of this, there are a few extras you don't find in other home insurance policies.
There is no landlord insurance required under Alabama law, but most mortgage lenders include it in the conditions of the loan.
Landlord Insurance VS Homeowners Insurance: What Is the Difference?
In a nutshell, the main difference between landlord insurance and homeowners insurance is who it covers. Landlord insurance is for those who rent their properties to others, and homeowners insurance is for people who live in the house they own.
There are also some differences in what it covers- most notably, the additional liability coverage that comes with landlord insurance.
What Is Covered by Landlord Insurance Policies in Alabama?
Dwelling Coverage
The most important aspect of landlord insurance is the dwelling coverage- which basically means general damage caused to the structure of your rental property.
It covers a range of events, with options to extend coverage. Some upgrade options worth considering in Alabama include natural disasters protection, flood coverage, and extended replacement cost coverage.
You must ensure you have enough dwelling coverage to cover the cost of a complete rebuild- or at least enough to cover the bulk of the work and leave you with a manageable bill.
In hurricane-prone areas, it is a good idea to choose a policy that covers everything, although it will probably cost more.
Additional Structures
Additional structure insurance coverage is part of standard rental property coverage. It pays for damage to garden fences, garages, sheds, and other structures on the rental property.
Landlord Liability Coverage
Liability insurance covers the legal fees and medical bills if you are liable for an injury sustained on your property. If you enhance your liability protection, you can also gain cover for legal expenses in tenant disputes, including evictions.
Personal Property Coverage
Landlord insurance covers damage to any of the policyholder's personal belongings that are damaged in their rental properties.
Lost Income Coverage
Fire and water damage are two possible scenarios where a property could become temporarily uninhabitable. Lost rental income protection pays to cover short-term losses due to covered events.
What Is Not Covered by Alabama Landlord Insurance?
You can add many things as a covered loss, but not everything. The following damages are not included in landlord insurance policies.
- Tenant belongings (they should purchase renters insurance to cover damage to their personal property)
- Wear and tear (you are responsible for the maintenance and replacement of old or worn appliances and equipment)
- Tenant damage caused intentionally or maliciously (lawsuits are usually required to resolve these financial disputes)
When Is Having Landlord Insurance in Alabama Important for Rental Property Owners?
The best example of how landlord insurance in Alabama can help is offering financial protection against natural disasters. Alabama sits on the Gulf Coast, and some parts of the state have a high risk of hurricanes.
This may seem like an extreme circumstance, but hurricanes regularly cause billions of dollars of property damage statewide. If your rental property is hit, it could be partially or completely destroyed.
Insurance coverage pays to rebuild, covers the loss of rental income, and may also help to provide temporary alternative accommodation for tenants.
It also helps in other sudden or unexpected situations, including fires, packed-up water pipes, minor storm damage, and paying medical bills if you are liable for an injured person on your property.
How Much Does Alabama Landlord Insurance Coverage Cost?
Some parts of Alabama have significantly higher average costs than others. The closer you are to the Gulf Coast, the higher your premium is likely to be.
Gulf Shores, for example, is the most expensive part of Alabama to insure rental property (over $4,500 for a $300,000 house), followed by Foley ($3,732 for a property of the same value).
In comparison, the average Birmingham landlord pays less than $2,000.
There figures are all annual rates taken from data provided by Clovered.
How Are Alabama Landlord Insurance Costs Calculated?
How can prices vary so much? It is because of how many factors influence the coverage needs and risk levels.
Landlord insurance in Alabama is calculated based on the following.
- The value of your property
- Location
- Risk of hurricanes
- Wind mitigation efforts
- The overall condition of the property
- Your previous claims and credit history
Money Saving Tips for a Better Deal on Your Landlord Insurance Policy
If you don't want to sacrifice any landlord insurance coverages but want to save some money on your monthly costs, there are a few things you can do.
In Alabama, the most important thing you can do is take steps to mitigate wind damage. Your premium is likely to be significantly cheaper if you have these measures on your property in Alabama.
- Consider raising your deductible: A higher deductible means you have more to pay yourself if you need to claim, but it does mean paying less for your policy.
- Make safety and security features a priority: Many insurance companies offer reductions for properties with alarm systems, camera doorbells, and other anti-theft devices.
- Prepare your property for inspection: Before you arrange an inspection with an independent insurance agency surveyor, invest some time and money into repairs and maintenance to get your property in the best possible shape.
- Pay annually: Most insurance policies are cheaper if you pay annually rather than monthly, and you could earn a discount if you enroll in autopay (not all companies offer this, but some do).
The Five Best Landlord Insurance Companies in Alabama
If you are looking for an insurance company to cover your Alabama investment property, these five are worth considering.
It is a good idea to compare each landlord policy and find the coverage options and monthly rates that work best for you.
What Does DoorLoop Do for Alabama Landlords?
Having a robust and reliable solution for handling your daily landlord duties is just as important as properly insuring your rental property, and that is where DoorLoop comes in.
DoorLoop is an all-in-one property management solution that streamlines your rental business and makes your job easier. It offers a convenient and accessible way to manage your property portfolio, finances, tenant interactions, and marketing- all in one user-friendly space.
The best features include online rent collection, automated reminders, accounting tools, tenant screening, maintenance management, and much more. You can also create your own personalized applications website for potential tenants and market your vacant properties on Zillow and Trulia.
Schedule a free demo today to see how DoorLoop can benefit your rental property business.
Summary
Landlord insurance is not required by law, but it should be considered an essential part of your Alabama rental property business. If you own rental property here, securing landlord insurance cover is one of the best things you can do.
Ask for an Alabama landlord insurance quote from multiple providers to get an idea of your options, but make sure you add enough coverage and policy add-ons to cover all your primary risks.
To protect your business on the operational side, check out DoorLoop's free demo for an introduction to a better, more efficient, and more convenient way to be an Alabama landlord.
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