Protect Your Property with Landlord Insurance in Alabama
Around 30% of households rent in Alabama, according to recent NLIHC data. This makes the Yellowhammer State a thriving place for landlords to provide homes across bustling college towns like Tuscaloosa, coastal hubs like Mobile, and suburbs surrounding Birmingham.
But owning a rental property in Alabama isn’t without risks. From unpredictable tornadoes to tropical storms rolling in from the Gulf, landlords could face potential threats that could cost tens of thousands of dollars in repairs.
Because standard homeowners insurance is only for owner-occupied homes, you probably need landlord insurance in Alabama instead.
Key takeaways
- If you rent out a property, whether short-term or long-term, you likely need landlord insurance.
- Alabama landlords deal with everything from severe storms and tropical cyclones to droughts and cold snaps. Your policy should reflect those risks.
- You can expect to pay about 25% more for landlord insurance than a standard home policy.
- Skipping coverage could mean paying out of pocket for repairs, lawsuits, or lost rental income.
Is landlord insurance required in Alabama?
No, Alabama law doesn’t require landlord insurance - but that doesn’t mean you don’t need it.
- If you have a mortgage on your rental, your lender will likely require coverage to protect their investment.
- If you own the property outright, it’s up to you - but skipping insurance could be a costly mistake.
Alabama has been hit by 116 billion-dollar weather disasters since 1980. Hurricanes, tornadoes, and severe storms can leave landlords with massive repair bills. Without landlord insurance, those costs may come straight out of your pocket.
And don’t count on homeowners insurance in Alabama to bail you out—it only covers homes you live in, not ones you rent out.
For example, say you lease out a Birmingham home, and a tornado levels the backyard shed. Or a tenant slips on a broken step and sues. Without landlord insurance, you’re most likely covering those expenses yourself.
💡When to contact your home insurance company vs get a new policy
If you’re renting out your primary residence for a short period—like a weekend or a few weeks - check with your home insurance company or agent first. Some insurers allow short-term rentals with prior notice or an added endorsement.
However, if you plan to rent your home regularly or lease it long-term, you’ll need landlord insurance instead. Standard home policies won’t cover business-related rentals, including frequent short-term stays or full-time tenants. A landlord or rental dwelling policy could make more sense for investment properties or vacation rentals
Still unsure if you need coverage? Learn more about whether landlord insurance is right for you.
How much is landlord insurance in Alabama?
Landlord insurance in Alabama and other parts of the U.S. typically costs 25% more than homeowners insurance for the same property, according to the Insurance Information Institute (III).
With the average home insurance policy running $3,147 per year, that puts a comparable landlord policy at around $3,934 annually - or about $327 per month. This is for $300,000 in dwelling coverage, $300,000 in liability insurance, and a $1,000 deductible.
But landlord insurance costs aren’t universal. Your premium depends on factors like location, property size, and coverage choices. If your rental is in a storm-prone area like Gulf Shores or Huntsville’s Tornado Alley, you could pay more due to the higher risk of damage.
Here’s what you might pay in different cities:
Birmingham landlord insurance costs
Birmingham’s mix of suburban and urban rental opportunities means insurance costs can fluctuate. Home insurance here averages $3,226 per year for zip code 35206, so a landlord policy might run around $4,033 annually.
Mobile landlord insurance costs
With its Gulf Coast location, Mobile is no stranger to hurricanes and storm surges. Home insurance averages $3,175 annually, so landlord insurance could be roughly $3,969 annually.
Huntsville landlord insurance costs
As Alabama’s tech hub, Huntsville attracts long-term renters, but that doesn’t mean insurance is cheap. Homeowners policies average $3,029 annually, meaning landlord insurance could cost around $3,786 annually. Rentals near Research Park or high-value areas may see higher rates.
Montgomery landlord insurance costs
Alabama’s capital has a strong rental market, from historic districts to modern developments. Homeowners insurance in Montgomery costs about $2,551 per year, so landlord coverage might be around $3,189 annually.
Tuscaloosa landlord insurance costs
With the University of Alabama bringing a steady stream of renters, Tuscaloosa landlords have strong demand, but there is also higher turnover and potential wear and tear. Home insurance averages $2,803 annually, meaning landlord insurance could be around $3,504 annually. Student rentals can sometimes lead to higher premiums due to increased liability risks.
Gulf Shores landlord insurance costs
Vacation rentals thrive in Gulf Shores, but coastal risks drive up insurance costs. Homeowners insurance here averages $3,861 per year, meaning landlord insurance could be about $4,826 annually.
Types of Alabama landlord insurance coverage
Alabama landlords can choose from three main types of policies: DP-1, DP-2, and DP-3. Each offers a different level of coverage and protection. Here’s how they stack up:
- DP-1 (Basic coverage). DP-1 often covers only the essentials, like fire, lightning damage, and internal explosions. It’s the cheapest option, but claims typically pay out based on the depreciated value of your property. This means you could get less than what’s needed to fully repair or replace any damage.
- DP-2 (Middle coverage). DP-2 could cover more risks, like hail, burst pipes, or theft-related damage. Plus, it might include loss of rental income if your property becomes unlivable. Claims are typically paid based on replacement costs, so you could get enough to rebuild.
- DP-3 (Comprehensive coverage). DP-3 is the best option if you want maximum protection. It often covers almost anything that’s not specifically excluded (like flooding or earthquakes) and usually pays for full replacement costs.
Depending on your provider, these landlord insurance coverage options might be included or available as add-ons:
- Liability coverage - protects you if a tenant or guest is injured on your property.
- Lost rental income - helps reimburse you for rent if the property can’t be lived in after a covered loss.
- Personal property coverage - covers items you provide, like lawnmowers or appliances—not your tenant’s belongings.
- Windstorm coverage - a must for properties along the Gulf Coast, where hurricanes and severe storms are common.
Alabama landlord insurance coverage exclusions
No insurance policy covers everything, and landlord insurance in Alabama is no exception. Here are some common exclusions to watch out for:
- Your tenants’ belongings. Landlord insurance covers your property - not your tenant’s stuff. If a fire or storm damages their belongings, they’re responsible for replacing them. The best way to protect yourself? Require renters insurance in your lease so tenants have their own coverage.
- Flooding. Alabama sees a flood every 12 days on average, but standard landlord insurance won’t cover water damage from rising waters. And don’t assume you’re safe just because you’re not near the coast - 20% of Alabama flood claims come from low- to moderate-risk areas.
- Earthquakes. Alabama isn’t known for earthquakes, but they do happen. If you’re worried about seismic activity, consider adding earthquake coverage.
- Wear and tear. Landlord insurance doesn’t cover maintenance issues or aging property features. If your roof is falling apart or your appliances give out, those costs come out of your pocket.
- Pest damage. Termites, rodents, and other critters are a landlord’s responsibility—not your insurer’s. Regular pest control is key to avoiding costly repairs.
- Neglect or intentional damage. If you ignore a leaky pipe and it turns into major water damage, your insurer won’t cover it. Same goes for intentional damage - if a tenant trashes your property on the way out, you’re likely stuck with the repair bill. Screening tenants and keeping up with property can help reduce these risks.
How to lower your Alabama landlord insurance premium
Landlord insurance in Alabama can add up, especially in areas prone to storms or flooding. Here’s how you can keep costs down without cutting coverage:
- Stormproof your property. Hurricanes and tornadoes are part of life in Alabama. Insurers may offer discounts for storm-proof upgrades, like impact-resistant windows, reinforced roofing, or a sump pump to prevent flooding.
- Revisit your deductible. Raising your deductible can lower your premium, but it also means paying more out of pocket if you ever file a claim. Choose an amount that saves you money on premiums without wiping out your savings in an emergency.
- Bundle and save. If you already have homeowners or auto insurance, check if your provider offers a discount for bundling landlord coverage.
- Vet tenants carefully. A tenant with a clean credit history and no eviction record is less likely to cause issues. Insurers see them as less risky, which could benefit your premiums.
- Invest in safety upgrades. Smoke detectors, fire extinguishers, and a security system don’t just protect your property—they can also lower your insurance rate. This is especially important for properties in high-crime areas.
- Get competitive quotes. Insurance companies don’t price policies the same way. Get at least three quotes to ensure you’re not overpaying for the same level of coverage.
💡Tip: Help your tenants prepare for severe weather
Alabama’s storms can be unpredictable, so make sure your tenants know how to stay safe. ReadyAlabama.gov recommends signing up for emergency alerts, identifying nearby shelters, and securing outdoor furniture before storms hit. Encourage tenants to keep flashlights, extra batteries, and a first-aid kit on hand - prepared renters could mean fewer damage claims.
Still have questions?
Not sure if landlord insurance is right for you? Here are answers to some of the most common questions Alabama landlords ask.
Can a landlord require renters insurance in Alabama?
Yes, you can require tenants to carry renters insurance as part of the lease agreement. This protects their personal belongings and can prevent disputes over damages. It also helps ensure they’re financially responsible for certain liabilities, which could reduce potential headaches for you.
What do landlords legally have to provide in Alabama?
Landlords must keep rental properties safe and habitable, including working plumbing, heating, and electrical systems, and keep the property free from major safety hazards. Likewise, regular maintenance could help prevent liability issues and insurance claim denials.
Does landlord insurance cover negligence in Alabama?
No, landlord insurance won’t cover damage or injuries caused by neglect. If a tenant slips on a broken step you ignored, or if a long-unfixed leak leads to mold damage, your insurance could deny the claim. Keeping up with repairs is the best way to protect your property and your finances.
Who has the cheapest landlord insurance in Alabama?
The cost of landlord insurance depends on factors like your property’s location, size, and coverage needs. Many insurance companies serve Alabama landlords, but pricing varies. The best way to find an affordable policy? Get insurance quotes from multiple insurers or agents and compare coverage, not just price.
What factors influence the price of landlord insurance in Alabama?
Several things determine how much you’ll pay for landlord insurance in Alabama. Location plays a big role - coastal properties near the Gulf often have higher rates due to hurricane risks. The age and condition of the home also matter since older properties or those needing repairs can cost more to insure. Your coverage limits will affect pricing, too - higher limits mean better protection but also higher premiums.
