Car Insurance in Alabama

I shopped around for 20 minutes and saved $150 on car insurance.

When I first started shopping for auto insurance, I thought that there was no way companies could differ that much for the exact same coverage. Wow, I was wrong. One of the most surprising things I found was that insurance companies vary across the board and it pays to shop around to find the best rate for your car, your lifestyle, and your financial situation.

No one wants to pay more for their auto insurance than they absolutely have to. The only way you can make certain you are not paying too much is to shop around. Find out what different companies charge for identical products and services. — Alabama Department of Insurance

I’m never going to outright recommend a company that will encompass all your needs, simply because there are multiple factors that influence an insurance premium, including driving history, claims history, age, location, car make and model. But what I will say is that you should absolutely take the time to get some quotes. I found that I could save $150 on the minimum coverage for the state just by shopping around.

It didn’t take long to gather four quotes online. Online quotes shouldn’t take more than five minutes. If you have to do a quote over the phone instead, expect that to tack on about 10 minutes or so. In either case, it won’t be too difficult. And if you really want to hurry things along, grab your vehicle’s make, model, configuration, and average annual mileage before you start.

I recommend using the online quote tools when they’re available. They are as accurate as a phone quote and they make it easy to select the exact coverage you’re after. When you’re on the phone, it’s a lot more tempting to agree to coverage, rather than asking how much each element adds to the total cost. Beware of that sneaky feeling and stay diligent. Ask the hard questions now, while you’re in the quote process — because you don’t want to compare quotes for things you’re not interested in or don’t understand.

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Our Top 5 Picks for the Best Car Insurance in Alabama

I began my search with four companies below. I picked these four for their JD Power ratings and their financial stability (as rated by A.M. Best) to make sure I wasn’t wasting my time with second-rate providers. Even if their rates were lower, I wouldn’t feel comfortable with a company that might not have the ability to make good on my claims.

Insurer My quote
GEICO $571
State Farm $654
Allstate $712
Progressive $718

I recommend aiming for the best car insurance first, not just cheap car insurance — and these four companies are a great place to start. Each one has top scores from A.M. Best, a financial strength rating agency that assesses a company’s long-term stability, and JD Power, a global leader in auto insurance customer satisfaction tests. Between the two criteria, you should be able to trust that you have chosen a company that will deliver on their value if you ever need them.

Based on my assessment, GEICO is the best option for minimum liability insurance for me. Minimum liability is all I lawfully need, but if I wanted to increase my coverage beyond the minimum, GEICO is still my best option.

I looked into the various discounts each of the companies offers. Unfortunately there wasn’t much else to save me even more. The only one that I qualified for was having safety features on my car and Progressive allows me to save $40 by paying my six month premium in full. Even with that discount, the premium for Progressive doesn’t make it nearly as good of a deal as GEICO.

To add Collision and Comprehensive coverage with any of the companies, that rates would really go up — from anywhere to double, triple, and in Allstate’s case, six times the cost of minimum insurance! Makes me glad I’m didn’t finance my car! Allstate is definitely not the value for me here. GEICO was the cheapest for me and, since their financial standing is excellent, it’s a bit of a no-brainer for me go with them. That’s not to say that GEICO is the one for you, too. Wish I could save you the legwork, but there’s no way around it.

Even If You’re Happy, It’s Best to Shop for a New Policy Every Couple of Years

Although most car insurance companies in Alabama don’t offer much in the way of discounts, you should shop for a new policy every couple of years. I don’t mean you need to switch your provider, but there are a few good reasons just to call and see what’s out there.

First, if you get a quote for a policy that’s less than your current provider, you can either grab that one or you can use it to negotiate a better rate. It’s good to check quotes online, but to always call to set up your premium. You can oftentimes negotiate a better premium by talking on the phone; they want you to be insured by them, so you can use that fact to get yourself a great rate.

Second, your insurance company is likely watching to see if you’re getting quotes. According to a study by Earnix, 45 percent of large insurance companies analyze an incredible amount of your personal data (like credit scores, web shopping habits, and social media activity) with a proprietary algorithm that decides how likely you are to look for better deals. Their goal? To know how likely you are to move to a different company and how likely you are to scoff at higher rates. Keep in mind that insurance companies want to retain your loyalty but they also want to maximize their profits.

It’s a controversial tactic called price optimization: Insurance companies gather big data on potential customers and will hike your rate up if they think you aren’t shopping around for other companies. That allows providers to charge you just enough to maximize profit, but also to keep you from being suspicious.

“Some critics argue that price optimization has been developed to increase insurers’ profits by raising premiums on individuals who are less likely to shop around for a better price and many of these people are low-income consumers.” — National Association of Insurance Commissioners

Even if you think an insurance company is only using your immediate information (age, gender, car make and model, driving history), most of these companies are mining data to find your habits and are gouging those individuals who aren’t taking the time to suss out their options. It’s incredibly important to shop for a policy every couple of years — and to beware of Price Optimization, as it’s a controversial, yet instated and widely used tactic that can hurt your chances of receiving the most competitive rate.

So far, 15 different states have deployed regulations against price optimization. Alabama, however, is unfortunately not one of them. So for the time being, it’s up to individual residents to prevent being taken “optimized.” If you get online quotes again every couple of years, then the insurance company you’re with will take the time to offer you a more competitive rate simply because they don’t want to lose your business. This is important to remember. If you remember one thing, it’s this: Never be complacent about your rate. You can usually lower it with just a little bit of time and attention. That also means if you haven’t been getting quotes with some frequency, you’re probably paying too much.

Alabama’s Minimum Coverage

The Bare Minimum

Alabama insurance laws requires liability coverage in the following minimums:

  • $25,000 for bodily injury or death per person
  • $50,000 total for bodily injury or death per accident
  • $25,000 for property damage

The Best Car Insurance Isn’t Just Cheap Car Insurance

If you opt into additional coverage that isn’t required by law, it will increase your premiums, but I believe it’s worth it to make sure you are 100% protected while on the road. That being said, the minimums in Alabama are low enough — about the same as the national average — that your premium being doubled for peace of mind is worth what would happen if you did have an accident or issue that wouldn’t be covered. It’s simply not worth the headache.

On average, drivers have an accident every 17.9 years. The median cost of an accident with a disabling, but nonfatal injury is $80,700. When you consider both, it’s easy to understand why getting more than the state-mandated coverage can be a real lifesaver.

Alabama has a high rate of uninsured motorists, which means that if you don’t opt into good insurance, you could be paying for someone else’s mistakes. It will run you about $200–$300 extra per year to receive more comprehensive insurance. Over 18 years, that $200 becomes an extra $3,600, which is way less than the $55,000 you’d be responsible if you permanently injured someone while maintaining only the minimum coverage.

(If your car is being financed or leased, you may be required to buy collision and comprehensive coverage as part of your finance agreement.)

What happens I’m caught without insurance?

If you are caught driving without insurance in Alabama, expect to face the following penalties:

  • A fine of $500 upon your first violation (and $1,000 upon your second or subsequent violation)
  • Suspension of your driver’s license for six months
  • Suspension of your car registration (For a second or subsequent violation, your registration will be suspended for a mandatory four months.)

If your vehicle registration is suspended because you have already been caught without insurance, there’s also a reinstatement fee you should be aware of:

  • $200 for your first offense
  • $400 for your second and subsequent offenses

Note: When you have your driver’s license reinstated after a suspension, you may be required to file an SR22 with the state. An SR22 certificate is not insurance; it is a form of proof of insurance that guarantees you will maintain the minimum requirements for car insurance.

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Beat the Average Premium: 9 Ways to Snag Cheap Car Insurance Rates

Alabama’s rates are pretty average, but there are some feasible steps you can take to bump your premium down even more. Check out the list below for ideas.

Nine Ways to Lower Your Insurance Rates

FAQs

Why are Alabama’s rates so affordable?

What to Expect
Average Monthly Premiums
United States $139
Alabama $104
Birmingham $109
Mobile $108
Hoover $103
Montgomery $101
Tuscaloosa $100
Huntsville $96
Decatur $94
Dothan $94
Source Quadrant

Alabama’s rates are about the same as the national average, so you can be sure that you’re not paying an outrageous premium. We’ve got better rates than half the country, so we could even consider ourselves lucky! The reason Alabama’s rates are perhaps a bit more pricier than half the country, though, is because too many drivers are uninsured despite the law requiring minimum liability insurance. Because of this, insured drivers have to pay a bit more in order to compensate for drivers who are driving without insurance.

Another possible reason for the slightly higher premiums is the fact that according to the Center For Disease Control and Prevention, Alabama has extremely high vehicle fatality rates. In fact, it’s over twice the average of the United States (13.7 per 100,000 compared to 7 per 100,000). Dr. Jim McVay, director of health promotion and chronic disease at the ADPH, says this is a result of the state’s widespread, rural population: “In metropolitan areas, they have plenty of traffic accidents but they’re very close to hospitals. … The real danger is being in a traffic accident on a rural road.” All the more reason to take safety seriously when you’re out on the road — wrecks are costly in more ways than one.

The Bottom Line

While you can certainly get away with paying less for cheap car insurance that will adhere to Alabama state law, it’s not advisable. Think about it: $25,000 for bodily injury might not even cover a single trip to the ER, depending upon the severity of the accident. The truth of the matter is that someone is going to pay for damages, and with a little adjustment to your monthly budget, that person does not have to be you.

Alabama residents are definitely among the lucky half of the country who enjoys reasonably priced premiums — even with the best coverage available. (Other states have minimum coverage premiums that are as expensive as our best rates with full coverage.) Don’t get complacent, though; that’s not a reason to avoid shopping policies. Otherwise, you might fall victim to price optimization and be penalized for your loyalty. Go get those quotes.

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Enter your zip code to compare rates from some of my top recommendations.

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