Why Is Car Insurance so Expensive in Alabama?

Last Updated on August 14, 2020

Car insurance is a great expense for most people, costing thousands of dollars a year depending on individual factors and state requirements. Although it might not feel like it, car insurance rates in Alabama are actually lower than the national average. In Alabama, the average cost of full coverage auto insurance is $1,379 annually. This is compared to $1,500 across other parts of the country.

While Alabama premiums are a bit cheaper than others who live elsewhere might pay, they’re not the least expensive in the country. There are factors unique to the state of Alabama that can cause insurance premiums to be quite pricey. Unfortunately, the state has vehicle fatality rates that are twice as high as the national average, which doesn’t bid well for drivers when it comes to forking out for insurance.

Fortunately, you have many options when it comes to car insurance in Alabama. Although there are companies offering cheap insurance in this state, they can be difficult to find, which can make shopping for a policy very frustrating. In this article, we’ll talk about the different factors that affect car insurance prices in Alabama, as well as how you can find affordable policies.

Minimum Car Insurance Requirements in Alabama

The differences in what types of insurance are legally required for drivers vary widely depending on the state that you live in. Some states require significantly better coverage or might necessitate that drivers carry personal injury protection or uninsured motorist coverage. Alabama, luckily, isn’t one such state, which is a big factor in helping to keep premiums lower. The insurance requirements if you reside in Alabama are as follows:

• Bodily injury liability coverage per person: $25,000
• Bodily injury liability coverage per accident: $50,000
• Property damage liability coverage: $25,000
• Personal injury protection: Optional
• Uninsured/underinsured motorist coverage: Optional

Why Are My Premiums in Alabama so High?

There are many factors that affect the cost of your car insurance premiums. Car insurance is actually slightly less expensive than average in Alabama. However, you may be charged high insurance premiums because of various individual factors. One of the most important factors is your location. If you live in a big city, you are likely going to pay higher insurance premiums than someone who lives in the country. The most expensive cities to insure in Alabama are Birmingham, Montgomery, Mobile, and Huntsville, which just happen to be the largest cities in the state. In large cities, there are more cars on the road and higher crime rates, which means that car insurance claim rates are higher too.

Another factor that affects your car insurance premiums is your age and experience. If you are a teen or young adult driver, you will almost certainly pay more for your premiums than someone who is more experienced. Insurance companies also look at your existing driving record to determine how much of a risk you are to insure. If you have accidents or driving violations on your record, or you have made several insurance claims in the past, you will probably be considered a riskier customer to insure, and therefore have higher premiums.

Finally, car insurance companies will look at the type of car you drive to calculate your premiums. They will look at how likely the car is to break down as well as how much the car would cost to repair after an accident. If you have a specialty vehicle, like a classic car or an RV, those are going to cost the most to insure because they are very difficult to repair.

Other Reasons Why Alabama’s Car Insurance Can Be Expensive

While the annual average premiums in Alabama are lower than premiums found elsewhere in the country, here are some factors that cause insurance rates in Alabama to be so high:

Fatality Rates – As mentioned earlier, Alabama’s auto accident fatality rates are twice the national average. More fatal accidents mean insurance companies are charging drivers more. In 2019, a total of 1,089 people died due to fatal car accidents in Alabama.

Weather – Places that experience more inclement weather tend to have slightly higher insurance premiums, all else held equal. Severe weather events like storms, flooding, and tornadoes are becoming increasingly common in Alabama, thus driving up insurance rates due to weather-related auto accidents.

Uninsured Drivers – Unfortunately, uninsured drivers are an expense that insured drivers have to take on. If you live in a state where there are a lot of people driving without coverage, your rates are going to be significantly higher to cover that gap. In 2015, it was estimated that 18% of drivers on Alabama roads lacked even minimum liability insurance.

Increased Cost Of Auto Repairs – Both the cost of cars and their repairs play into insurance rates. As cars add more technology these days, repairs are getting increasingly more expensive. In Alabama specifically, the average cost of car repairs has increased by more than $110 since 2012.

Other Factors That Can Affect Your Insurance Rates

While many of the factors that increase your insurance rates are out of your hands, there are some more individualized factors that have a direct effect on how much you are paying for your car insurance. Some of these factors include:

• Driving History – Those who drive safely and maintain a clean driving record generally receive lower rates. Insurance companies can trust that you will maintain your caution while driving in the future and assess you as “low-risk” compared to someone with a more detailed driving record.
• Zip Code – Living in a crowded and heavily trafficked area means more at-risk situations. As such insurance rates are likely to climb. For those living in smaller towns or communities, rates are likely to be lower.
• Cities – In Alabama, the most expensive cities to live in for insurance are Jasper, Eufaula, Citronelle, Grove Hill, and Mobile. The least expensive cities to live in are Florence, Ozark, Huntsville, Dothan, and Foley. In Mobile, you can expect to pay approximately $1,403 annually for your insurance, whereas a resident of Florence pays an average of $1,171 a year. This shows the huge variation in insurance rates between cities.
• Mileage – Longer commutes or frequent travel can result in higher rates. Spending more time on the road means more time that you are at risk. Putting less mileage on your car can save on premiums.
• Claims History – Insurers view your claims history as one of the major factors that determine your auto insurance rates. The fewer claims you file, or have filed, the lower your rates will be. You can even get a significant claims-free discount if you have not filed any insurance claims within a three to five year period.

What Can I Do to Bring My Car Insurance Premiums Down in Alabama?

There are many things you can do to lower your car insurance premiums in Alabama. Here are just a few things you can do to bring your rates down.

• Drive safely. The fewer accidents and tickets that are on your record, the lower your premiums are going to be. Put your phone and other distractions away while you are driving, and focus entirely on the road. You should also make sure you’re never driving under the influence of alcohol, medication, or anything that could alter your ability to drive at your best.
• Take a driver’s safety course. Many insurers will give you a discount on your insurance if you take a class on defensive driving. These classes teach you helpful skills to stay safe on the road, and they are usually short and relatively inexpensive. If you’re interested in using a driver’s safety course to get a discount, talk to your insurance company to see if it’s something they offer.
• Improve your credit score. Insurance companies do look at your credit score when determining your premiums, although it’s not the only thing they consider. If your credit score is low, make sure you’re paying your bills on time, and make efforts to reduce your overall usage. Making slight improvements to your credit score can make a big difference in the cost of your insurance premiums overall.
• If your monthly premiums are eating into your budget, consider increasing your deductible. This means you’ll pay more out-of-pocket if you do make a claim, but your monthly premiums will be much lower. If you don’t drive much anyway and are financially stable, this is an easy way to bring your premiums down.

Cheapest Insurance Companies in Alabama

There are so many different factors that play into how much you can expect to pay for car insurance, because of this, it’s always a good idea to shop around and find the companies that can offer you the best deals and premiums. Car insurance is a competitive market, and since different drivers are looking for different things, and have varying records, two quotes from two companies can look drastically different. If you want a head start on looking for the right insurance company for you, here are the companies offering the best rates in Alabama:

1. Nationwide
2. ALFA
3. Progressive
4. State Farm
5. GEICO
6. Allstate
7. USAA
8. The Cincinnati
9. Travelers
10. COUNTRY Financial

Final Word on Auto Insurance Rates in Alabama

The cheapest car insurance in Alabama for you will depend on your personal driving history and financial situation. When looking for car insurance, you should always get quotes from multiple companies and compare their value, since every company operates differently. You should also keep in mind that the cheapest insurance isn’t always the best option – you’ll need to consider the overall value as well. You should also ask your insurance agent about discounts – most companies have a large list of discounts that you may qualify for.

The good news if you are a resident of Alabama is that you’re more likely to pay less for your auto insurance annually than the national average. This is largely thanks to the fact that Alabama has relatively lenient required insurance laws, and doesn’t require drivers to carry personal liability or uninsured motorist coverage.

However, just because you’re paying less than other drivers in other areas of the country, it doesn’t make car insurance cheap! Alabama’s high fatality rates combined with other factors mean that premiums can still be pretty pricey. Although car insurance in Alabama can be expensive, you have plenty of options to choose from. Shopping around is the best way to make sure you’re getting the best value possible, so look at both local and national companies.