Best Landlord Insurance in Alabama

Residential landlords invest time and hard-earned money into their properties. Property damage to your rental can be devastating and easily amount to tens of thousands of dollars, especially if you’re exposed to hurricanes near the Gulf Coast of Alabama.

Landlords need insurance protection. Keep reading to understand the ins and outs of landlord insurance coverage and how to get the best rental property insurance in Alabama.

The average cost of landlord insurance in Alabama is between $1,230 per year and $2,839 on $150,000 homes and between $1,970 and $4,572 on $300,000 homes.

The cost of landlord insurance will vary significantly based on many factors, one of the most important being your location in the state. Your property’s location changes its level of risk. Home insurance premiums in the southeast, in general, are higher compared to the rest of the nation, thanks to the risk of hurricanes.

Landlord premiums are commonly 15% to 25% higher than homeowners insurance premiums on the same houses. To get the most accurate representation to help you with your insurance search, we created a list of average landlord insurance premiums in 15 popular cities in Alabama. The one closest to you will have the fairest reflection of what you can expect to pay.

Daphne, Foley, and Gulf Shores are the only cities with average rates over $2,000 on a $150,000 home. These coastal cities tend to have high premiums due to their location on the Gulf of Mexico. Hurricanes and tropical storms are massive concerns for insurance companies. These coastal towns at greater risk of storm damage pay higher premiums to offset their increased property damage risk every hurricane season.

Be aware that these averages are limited in scope since many more factors affect premiums. We’ll break down the most critical factors in depth later on in this article. But, for now, know that property value is essential in determining your premiums. 

As you might imagine, more valuable properties need more insurance. Take a look at a list of the same cities with average landlord premiums for $300,000 homes.

Landlord insurance, also called rental property insurance, covers landlords’ property and personal liability in a variety of ways. While not every plan will include all of these coverages, you’ll have the option of the following in your landlord insurance:

Depending on your property and coverage needs, you can choose from one of three types of landlord insurance plans. They combine the above coverages in different ways.

DP-1 plans are the most basic rental property insurance you can get. They include dwelling, other structures, and loss of rent coverage, but they typically exclude the others by default. DP-1s cover the fewest sources of damage, called perils, and they only cover your property at actual cash value, which accounts for depreciation and lowers claim payouts.

DP-2 insurance covers more perils, such as theft, vandalism, and water damage, in addition to fire and wind damage covered by DP-1s. DP-2 policies often cover about 18 named perils, whereas DP-1s only cover nine. DP-2s also cover some losses at replacement cost, although they usually exclude liability coverage.

A DP-3 plan can include all the above coverages by default. If not, you should be able to add them at an extra cost. DP-3 insurance covers the most damage, all at replacement cost. As a result of their enhanced protection, DP-3 policies are usually the most expensive choice. 

The best landlord insurance in Alabama covers your rental property fully with all the coverages you need at a price that works for you. Due to the varying nature of rental properties and their management, landlord insurance is highly customizable. Know your coverage needs and compare multiple policies to find one that works for you.

Since landlord coverage needs vary, You may be more comfortable forgoing some coverages than someone else, thus lowering your premiums in an attempt to get cheap rental property insurance in Alabama.

For instance, you may consider liability insurance a must if you live out of state and cannot keep an eye on your rental, so you’re not always sure of its condition or day-to-day visitors. Alternatively, you might be comfortable getting a DP-1 or DP-2 that excludes theft and vandalism coverage if you live on-premises or close to your rental and can regularly verify its upkeep.

Depending on your needs and carrier, you may be able to purchase additional endorsements to your policy to make it the best landlord insurance in Alabama for you. For example, some providers offer extended replacement cost, which boosts your dwelling coverage a certain percentage higher than your replacement cost.

Remember your premiums. Always ask about what discounts you can receive. And, know that some areas will be cheaper than others.

Of the places we analyzed, the cities with the cheapest landlord insurance in Alabama are Birmingham, Auburn, Alexander City, and Montgomery. These cities are all notably inland, shielding them from the risk of hurricanes and tropical storms.

We mentioned that some of the most expensive places for rental property insurance in Alabama were the popular cities on the Gulf Coast. Even in these high-risk towns, there is a way to bring down your premiums: wind mitigation.

 Wind mitigation involves reinforcing parts of your house, such as the roof, windows, and entryways, against strong winds. If your property passes a wind mitigation inspection, insurance companies will provide you with a discount on your premiums. 

Take a look at how the average cost of landlord insurance in Alabama changes in certain hurricane-prone cities when you factor in wind mitigation savings.

On $150,000 homes, the average landlord insurance rate drops between 44% and 56% in these cities when you have wind mitigation. This underlines the importance of wind mitigation. You can save well over $1,000 every year. See how the trend carries over to $300,000 homes.

Many factors affect the average landlord insurance in Alabama because companies need to be sure that underwriting the policy will be a net gain for them. They’d go out of business if they lost money on every policy.

Some of the most significant factors affecting landlord insurance for rental property in Alabama have to do with construction, such as your roof, dwelling size, and property features.

Your premium will vary depending on the type of rental dwelling you want to insure due to different sizes, values, and the number of tenants. Your premium will change depending on if you’re going to cover a:

Larger places with more tenants will cost more to insure. 

In Alabama, where hurricane damage is so prominent, insurers are especially wary of your roof. Properties with older roofs tend to have higher premiums. Dated siding, outdated pipes, and old air conditioners can also be issues. Insurance companies will almost certainly ask about your rental’s HVAC components and roof during the quoting process.

Insurance companies will also ask about “attractive nuisances” on your property, which can increase your liability risk. Having one or more of these nuisances, commonly trampolines, skating ramps, and playground equipment, can raise your premiums. Having a wood stove or furnace as a primary heat source can raise your rates also because they increase your fire risk.

Every rental property with a mortgage must have insurance coverage. Since homeowners insurance won’t cover a property other than your own, you need a type of landlord insurance to satisfy lender requirements.

No law requires landlords to have rental property insurance in Alabama. And, if you have no mortgage, no one will require you to maintain your coverage, although it’s always recommended you do.

Whether you’re renting a second or vacation home or living in one unit or side of your rental while housing tenants in the other, many residential landlords have mortgages on their properties. Lenders require property owners to keep insurance coverage for the life of the loan to protect their investment in your property.

If you don’t get a policy on your own, your lender can force-place coverage on you. Force-placed coverage is more expensive and less helpful than a policy you can find yourself.

You should compare policies from multiple providers when getting Alabama landlord insurance quotes to guarantee you’re getting the best coverage at the best price. At Clovered, we make this easy. Our proprietary quoting platform lets you compare plans in your area completely online. 

As an independent insurance agency, we partner with many of the top landlord insurance companies in Alabama, so we can give you several options. Headquartered in Florida, we’re very familiar with the coverage needs of the Southeast.

If at any point you want to speak with someone about your Alabama landlord insurance quote, please don’t hesitate to give us a call. You can chat with one of our licensed agents during business hours at  833-255-4117. You can also email us at [email protected] at any time.