Insurance companies vary across the board and it pays to shop around to find the best policy rate for your car, your lifestyle and your financial situation. No one wants to pay more for car insurance than they absolutely have to.
There is no single insurer that will meet the needs of every driver, simply because there are multiple factors that influence an insurance premium, including driving history, claims history, age, location, car make and model. This is why you should absolutely take the time to get some quotes. We found that you can save $338 on the minimum coverage for Alabama 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.
Consider using insurers’ online quote tools when they’re available. They’re 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. You don’t want to compare quotes for things you’re not interested in or don’t understand.
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Our Top 4 Picks for the Best Car Insurance in Alabama
Based on our research, Geico is the best option for minimum liability insurance. Minimum liability insurance is all you lawfully need, but even if you wanted to increase your coverage, Geico is still your best option.
Each insurer offers various discounts. Unfortunately, there wasn’t much more savings to be found in this case. Progressive allows you to save $40 by paying the six-month premium in full. Even with that discount, the premium for Progressive isn’t nearly as good a deal as Geico.
Adding collision and comprehensive coverage with any of the companies could push up your rate. Premiums can double or triple in cost — or in Allstate’s case, cost six times as much as the minimum insurance! This is important to know because these are some coverages that are usually required if you have a car loan.
Alabama’s Minimum Coverage Requirements for 2020
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
If you opt for additional coverage that isn’t required by law, it will increase your premiums, but it’s worth it to make sure you are 100 percent 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 it versus what would happen if you did have an accident 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 $93,800, according to the National Safety Council. When you consider those statistics, 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, too, which means that if you don’t opt for good insurance, you could be paying for someone else’s mistakes. It will run you about $200 to $300 extra per year to have 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 for if you permanently injured someone while maintaining only the minimum coverage.
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 emergency room, depending on 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.
If your car is being financed or leased, you will probably be required to buy collision and comprehensive coverage as part of your finance agreement.
If you are caught driving without insurance in Alabama, expect to face the following penalties:
- A fine of $500 for the first violation and $1,000 for the second or subsequent violations
- 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 four months.)
If your vehicle registration is suspended because you’ve 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
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Why are Alabama car insurance rates so affordable?
Alabama’s rates are lower than the national average, so you can be sure that you’re not paying an outrageous premium. The reason Alabama’s rates are perhaps a bit pricier than in some spots, 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 to compensate for car owners who are driving without insurance.
Another possible reason premiums aren’t even lower is the fact that, Alabama has extremely high vehicle fatality rates, according to the Centers for Disease Control and Prevention. In fact, it’s twice as high as the national average: 13.7 per 100,000 compared with seven per 100,000. This is a result of the state’s widespread rural population, according to the Alabama Department of Public Health. Alabama metro areas have plenty of traffic accidents, but they’re close to hospitals. The danger is being in a traffic accident in a rural area with no hospital close by. All the more reason to take safety seriously when you’re out on the road — wrecks are costly in more ways than one.
What is no-fault insurance?
No-fault insurance allows each driver’s own insurance company to cover their own injury claims. This typically allows issues to be treated more quickly. Thirteen states have no-fault insurance laws. Alabama is not one of them.
What is SR-22 insurance?
This is a guarantee that you will retain a minimum or set level of insurance over a set period of time. SR-22 covers drivers considered to be in the high-risk category. These drivers may have a long history of citations or serious offenses such as DUI. If your license has been suspended, you may be required to show proof of SR-22 insurance before it can be reinstated.
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. This doesn’t mean you need to switch your provider, but there are a few good reasons just to call and explore other car insurance companies.
First, if you get a quote for a policy that costs 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 always call to set up your premium; you can often 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 (credit score, online 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.
Incremental increases on good policyholders is a controversial tactic called “price optimization.” Insurance companies gather big data on customers and will hike your rate 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.
Even if you think an insurance company is using just your immediate information (age, gender, car make and model, driving history), most of these companies are mining data to find your habits and are raising rates on customers who aren’t taking the time to shop around for options. It’s incredibly important to shop for a policy every couple of years and to beware of price optimization because it’s a 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 not one of them. So for the time being, it’s up to individual policyholders to prevent themselves from being price 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. If you remember one thing, it should be this: Never be complacent about your rate. You can usually lower it with just a little bit of time and attention. If you haven’t been getting quotes with some frequency, you’re probably paying too much.
Shopping around offers additional benefits for three categories of customers. Those with good credit are a low price risk to any company; they can typically get great enticements to switch. Young drivers should call around the day they age out of each risk bracket rather than keep their monthly policy at the higher rate. Those with bad credit should watch their insurance rates, too. If they can raise their credit scores, they become lower risk customers and their prices will go down.
Best Car Insurance in Alabama
- State Farm
Alabama residents enjoy reasonably priced premiums, even with the best coverage available. Insurers in other states have minimum coverage premiums that are as expensive as Alabama’s best rates with full coverage. Don’t get complacent, though; you might fall victim to price optimization and be penalized for your loyalty. Go get those quotes.
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