Alabama Car Insurance: Everything you need to know

It seems like owning a car gets more costly every year. Fluctuating gas prices, higher tolls, and routine maintenance all add up quickly - especially if you're still making payments on your car. Insurance is one more mandatory expense, but that doesn’t mean you should go with the first cheap car insurance you find and run with it. If you get into a car accident, spending those few extra dollars a month might be the difference between an inconvenience and a catastrophe. There are a lot of car insurance companies out there, and all the choices might have you paralyzed. So if you’re looking for car insurance in Alabama, where do you begin?

Let’s begin by reviewing the requirements for car insurance in Alabama.

Minimum Liability Coverage

Most states have mandatory liability laws, and the rules for car insurance in Alabama are pretty standard. Simply stated, your minimum coverage is 25/50/25.

  • $25,000 Bodily Injury to an individual in an accident

  • $50,000 maximum Bodily Injury payout for multiple injured parties

  • $25,000 for Property Damage

So what does that mean? With minimum liability coverage, if someone gets injured in an accident and you’re at fault, your insurance will cover up to $25,000 of the costs. And if multiple people are injured, you’re covered for up to $50,000. Medical bills can get expensive, and E.R. bills are the worst of them. If the other person has to go to the hospital, get x-rays, or have surgery, the price tag increases exponentially. You could be in for a lot more in damages than you have in coverage. This can include any lost wages of the injured party if their injury causes them to miss work.

That final number, property damage liability, applies to anything that was damaged in an accident. Usually, this means another vehicle, but it can also mean damage from a collision to a building or fence. Just like with the bodily injury policies, anything over your coverage is coming out of your pocket. This can get dicey with expensive cars. If you get into even a minor accident with a $200,000 Tesla, you could quickly exceed the damages of a bare minimum liability policy. This coverage doesn’t go towards your vehicle, even if you don’t use the full amount.

Is Alabama a tort state or a no-fault state?

Alabama is a tort state, which means every accident is an at-fault accident, for either you or someone else involved with the collision. A law enforcement officer will interview drivers and witnesses and assess the scene to determine who is at fault, and they will be the ones responsible for damages. The scene of an accident can get emotional quickly. Avoid confronting the driver, and don’t admit blame or point any fingers. That is for the officer on the scene to determine. Honesty is the best policy here, and if you’ve got the right coverage, your insurance company will be there for you no matter what.

Regardless of who is at fault, you should still contact your insurance company immediately to report the incident. Once the claim is filed, they will help you through the process of dealing with the other driver and their insurance company. You do not have to speak with the other driver's insurance company if they contact you about the incident. They may be trying to get more details about the incident to try to shift the fault to you. Depending on your coverage, your insurance company might provide you a lawyer to help in dealing with the other driver’s company.

Don’t get caught without it

Starting in 2017, Alabama passed stricter penalties for uninsured drivers. Failure to drive without minimum liability insurance can result in a fine, suspension of registration, or imprisonment even on the first offense. In some states, the only way you can get caught driving without insurance is if you get pulled over or are involved in an accident. Alabama randomly selects vehicle registrations to send a questionnaire to verify their MLI coverage. Don’t ignore it - failure to provide proof of insurance will result in a suspended registration that results in a hefty reinstatement fee.

The fines aren’t the only reason you should be insured. In 2019, Alabama saw 53 tornados in nine days, and the threat of wildfires has been persistent. Hurricanes aren’t uncommon either, and an estimated 12% of drivers are uninsured. Liability insurance can’t help you against storm or fire damage. Maybe you're a great driver, but there’s a lot of forces beyond your control that could total your car. Comprehensive coverage can save you a lot of money and hassle against things that are outside of your control.

Financing your car and gap insurance

If you’re still paying off your loan, your lienholder will require you to have full coverage for your vehicle until it is paid in full. If you cancel your coverage before you’re paid off, they may purchase expensive single interest insurance on the vehicle that only protects them and add it to your pay-off amount. If you used owner financing in the purchase of your vehicle, they could repossess it. In other words, you need to be sure you have full liability insurance on your car until you are paid off in full!

Gap insurance is there to protect you in situations where the amount of money you owe on the car is more than the value of the vehicle. It is common in low or no down payment scenarios to drive off the lot owing more on your vehicle than it’s worth - and if your car gets totaled during this time, your insurance settlement will leave you short on paying off your vehicle. Gap insurance is not a requirement in Alabama car insurance laws, and it is illegal for your leaseholder to make it one of the loan conditions. It’s much better to get gap insurance added to your insurance policy. The people at a car dealership are not licensed insurance agents, and there is not much oversight or accountability on what you are getting from them. It’s usually more expensive, as well.

Penalties & fines for driving without insurance

There are some pretty serious fines and penalties for driving without car insurance in Alabama. The following are the penalties for doing so, according to the ADR:

Violation Registration suspension period Registration reinstatement fee Fine Total fines & fees
1st Until proof of coverage is provided & fees are paid $200 $500 $700
2nd & subsequent 4 months and until proof of coverage is provided & fees are paid $400 $1,000 $1,400

Uninsured and Underinsured Drivers

The bodily injury liability policies do not cover any injuries you or your passengers sustain in the accident. If you are the at-fault driver, that means any injuries your passengers sustain comes out of your pocket, as well as any injuries to yourself. The same goes for property damage coverage. Your car isn’t covered under liability. If the at-fault driver doesn’t have enough collision coverage, you can file a Med Pay Policy or an Uninsured Underinsured Motorist Policy through your car insurance, if you elected to have that coverage.

Alabama doesn’t require you to have protection from an uninsured motorist, but that doesn’t mean you are saving money if you don’t add it to your policy. If a hit and run driver totals your car, or worse, if you suffer a serious injury, you could be stuck with quite a bill with no help to pay it off. It only gets worse if the loss of your vehicle or your injury prevents you from going to work. There are better ways to save than skipping out on the coverage you might need.

Coverage recommendations

It may be wise to consider buying more than the minimums required by state law in order to protect yourself financially in certain situations. Consider the following Alabama-specific reasons to buy extra coverage.

Protecting against uninsured motorists

Uninsured motorist coverage may be a good addition to your Alabama car insurance policy. If all you have is a minimum policy and you get into an accident caused by a hit-and-run driver or a driver who has no insurance, you have no auto coverage that'll pay for your injuries. If you have uninsured motorist coverage in this scenario, though, you'd be covered. "This coverage in effect takes the place of the insurance that the other driver should have purchased but did not," according to the Alabama Department of Insurance (ADOI).

This coverage consideration is especially important for drivers in Alabama because the state has one of the highest rate of drivers without auto insurance. According to the most recent estimates from the Insurance Research Council (IRC), about 1 in 5 drivers in Alabama have no coverage. That's the sixth-highest rate in the nation.

Protecting against storm damages

Another thing drivers in Alabama should consider purchasing extra protection for is storm damage. If you want to be able to use your insurance for repairs after a hailstorm or tornado, you're going to need to add optional comprehensive coverage to your policy. According to the NAIC, about 7 out of 10 Alabama drivers choose to buy this coverage type.

Alabama has a higher-than-average volume of hailstorms. In March 2012 alone, the state saw 195 storms, with an average hailstone size of 1.13 inches for the year. Things like hail may not seem to be very threatening, but in actuality, it can cause substantial damage. For Alabama drivers who have comprehensive coverage, the average hail-related claim size is around $2,400, according to data from the Highway Loss Data Institute.

Over the past few years, Alabama has also seen some devastating tornadoes rip through the region. Comprehensive will also cover any damages caused by them.

Insurance rates & pricing

Price differences between companies & locations

Like in any state, comparing Alabama auto insurance quotes from multiple companies is an important step in the process of getting the best price on coverage.

For example, a 30-year-old married man living in Birmingham could see as large as a $400 price difference between companies, according to some sample rate comparisons provided by the ADOI. The lowest quote given to the driver in the sample comparison was a mere $293 for six months' worth of coverage. The highest quote, on the other hand, was $706.

The bottom line: Make sure you compare prices from multiple companies before settling on a policy. If you don't, you could end up paying twice as much for the same coverage.

Another thing that can drastically affect the size of your access to cheap Alabama car insurance is which part of the state you live in. One Alabama auto insurance price analysis showed that policy prices for the same driver could vary by as little as 0.3 percent to as much as 43 percent depending on location. In the analysis, Dothan had access to the lowest annual premiums, while Mobile has the highest premiums.

Tracking auto insurance price changes

State regulators allow consumers to see which companies in the state are raising or lowering rates through an online database hosted on their website. The tool is called the [Rate Bulletin Search][24].

From the page, you can select to view rate changes by coverage type and the date that the changes went into effect. Or you can search by company.

Discounts for drivers 55 and older

According to Section 27-13-120 of the Alabama Code, residents 55 years old or older are able to get a discount on their car insurance for taking an accident prevention course. The course must be approved by the state, and insurers are only required to maintain the discount for three years if the insured driver keeps a clean record, meaning they don't cause any accidents or commit any moving violations. Any participants can take an approved course once every three years to maintain the discount.

Eligible courses are sponsored by the National Safety Council, AAA, AARP, or another course approved by the Department of Safety. When you're considering which course to take, check with your insurer to make sure it'll get you the discount.

In August 2012, the Alabama Legislature made it easier for drivers to get the discount by adding online driving courses to the approved course list and cutting the required instruction time down to 6 hours.

Coverage verification database

Alabama officials can identify whether a car is insured using the Online Insurance Verification System (OIVS). Since January 2013, Alabama auto insurance companies have been submitting information to the OIVS about all of the policies they have covering cars registered in Alabama. OIVS is designed to track that information in a database and identify which cars lack the proper coverage required to be on the road.

OIVS is primarily used by officials who need to verify coverage before issuing a license plate, according to a presentation from the DOR. Law enforcement are also permitted to use OIVS to verify coverage during traffic stops and accidents.

How much will coverage cost?

There are a lot of factors that affect the price of your car insurance. Your age, sex, credit score, marital status, and driving record may all affect the insurance premiums. The year, make, and model of the car, as well as the mileage on it, have a hand to play as well. On average, Alabama car insurance runs $1358 a year, which is a little under the national average. Before you start looking at prices, you should determine how much liability coverage you need. Knowing how much deductible you would be able to pay in the event of an accident and how much you’d be able to put towards medical costs or damages can help you decide how much you’d need your insurance coverage to handle.

Don’t trust an insurance agency just because their commercials promise significant savings. Find out for yourself where you can get the best deal. By answering a few simple questions, Online Auto Insurance will recommend the best insurance company for you, and let you compare car insurance quotes with other popular companies in your area. There is no one-size-fits-all company for Alabama car insurance. Some offer affordable premiums to people with poor credit ratings and less than perfect driving records, while others offer great bundles for people wanting to get home or life insurance, as well as a multi-car discount. Some companies have flexible payment options that don’t require an autograft, letting you decide which day is the best for making a payment. More and more companies offer monitoring devices that can give you cost breaks for low mileage or safe drivers.

The ideal policy leaves you covered in those worst-case scenarios without car insurance premiums burning a hole in your wallet. If you’ve got a new car, or if it’s time to switch things up, let us take you the extra mile to find the company that’s right for you.