Average Cost of Car Insurance in Alabama

Insurers use several factors to determine a driver’s premiums, like driver characteristics and state-specific statistics. Let’s check out how insurers determine rates in the Heart of Dixie, how much policies cost in the state, and what contributes to the average cost of a car insurance policy in Alabama.

Auto insurance in Alabama will differ from driver to driver, but the average policy is a full coverage policy from one of the top insurers in the state with several additional coverages and various stackable discounts applied. While full coverage isn’t legally required in the state, many drivers opt for a more expansive policy to ensure their safety on the road. 

Alabamans aren’t required to have a full coverage policy, as the minimum legal coverage in the state is $25,000 in bodily injury liability per person, $50,000 in bodily injury liability per accident, and $25,000 in property damage liability per accident. Those who finance or lease their vehicles may be legally required to carry collision and comprehensive coverage as a part of their legally binding contract. 

Since Alabama is a tort state, not a no-fault state, drivers must only carry liability coverage to protect other drivers on the road should the policyholder cause an accident. Policyholders who opt for a full coverage policy can carry optional coverages to help cover their expenses, even if they’re at fault in an accident. 

Those with a full coverage policy may opt for coverages like medical payments coverage (MedPay), uninsured or underinsured motorist coverage, collision coverage, comprehensive coverage, or even GAP coverage, among other options. A full coverage policy with additional optional coverages helps protect policyholders in a broader range of accident scenarios than a liability-only policy. 

The average car insurance cost in Alabama is about $1,670 annually for a full coverage policy or about $835 for a minimum coverage one. The average rate in the Heart of Dixie is on par with the national average rate. While most insurers will offer rates in the range of the state average, drivers may end up paying higher or lower than average for their premiums depending on a few key factors.

Car insurance rates vary from driver to driver, as insurers use unique facts about each policyholder to determine one’s rates. Insurers may use both driving and non-driving factors about each policyholder to influence their rate calculation, which may cause rates to be higher or lower than the state average. 

Insurers often use driving factors, like one’s driving or insurance record, as a key determinant in their rate calculation. However, insurers may use non-driving factors like one’s gender, age, or ZIP code, among several other factors, to further inform their rate calculation.

When insurers calculate premiums, the key thing they’re looking for is how big of a risk they take by binding a policy with a driver. If a driver is high-risk, meaning they’re more likely to file a claim than the average driver, then insurers translate this risk into higher premiums. This especially applies to those who require an SR-22 form to be filed on their behalf.

It makes sense that a person with a poor driving or insurance record is considered at higher risk by insurance companies and therefore pays higher rates. However, what does one’s ZIP code have to do with anything? 

Insurers use statistics correlated with non-driving factors, such as accident frequency in each ZIP code, to influence premium calculations. Drivers who live in densely populated ZIP codes are more likely to get into accidents as there are more drivers on the road. Thus they’re considered riskier to insure than the average driver and may pay higher premiums even with a clean driving record. 

On average, car insurance rates in Alabama are around $1,670 annually for a full coverage policy. While the average rate in the Heart of Dixie for a full coverage policy is on par with the national average, only some drivers will have access to such a premium. Depending on drivers’ driving and non-driving factors, they may pay higher or lower-than-average rates for a full coverage policy.

States typically use two key factors when determining the range of auto insurance premiums: population and the population of uninsured drivers. States with high populations or higher-than-average populations of uninsured drivers typically have higher-than-average rates because drivers are more likely to file claims. 

Drivers who live in states with high populations are more likely to file claims because they’re more likely to get into accidents. Thus, the average premium in the state is increased. On a similar note, when a state has a higher-than-average population of uninsured drivers, drivers are more likely to get into an accident with an uninsured driver, which puts strain on the insurance system and causes insurers to charge higher premiums. 

Alabama has an average-sized population and an average number of about 12% of uninsured drivers. Thus, the average premium in the state is on par with the national average. 

If your premium for a full coverage policy is higher than the state average of $1,670 annually, it may be because you live in a highly populated ZIP code, have a poor driving record, have previously been caught driving without insurance, or your insurer has higher-than-average base rates. 

On average, Alabama car insurance costs about $1,670 for a full coverage policy or about $835 annually for a minimum coverage one. It’s essential to keep in mind, though, that the premium isn’t the only cost associated with auto insurance. Policyholders are also responsible for their deductibles when filing a claim before receiving the total amount of their coverage benefits. 

Policies with low premiums generally have high deductibles and policies with high premiums typically have lower deductibles. When binding a policy, drivers can select which option they’d rather maintain, as it’s a matter of the driver’s personal preference. 

In Alabama, auto insurance costs about $140 per month for a full coverage policy or about $70 per month for a minimum coverage one. However, it’s crucial to remember the premium isn’t the only cost associated with an insurance policy.

While a minimum coverage policy may be the cheapest policy in the state, it carries a significant amount of risk in the long term. Say a driver with a minimum coverage policy causes an accident that totals both vehicles and sends both drivers to the hospital for their injuries.

In such a scenario, the at-fault policyholder’s liability coverage will help to cover the victim’s expenses up to the coverage limit but won’t cover the policyholder’s expenses. Thus, the policyholder will be liable for their own medical bills and vehicle repairs, any of the victim’s remaining expenses after the coverage limit is reached, and possible legal fees if the victim decides to sue. 

While the short-term savings of a minimum coverage policy are enticing, it’s much safer and more fiscally responsible to carry a full coverage policy than risk financial ruin with a minimum coverage one. 

If you’re looking for a full coverage policy in the Heart of Dixie at an average or below-average rate, the best way to see all your options is to get and compare quotes online. Getting and comparing quotes is the best way to see how far you can stretch your dollar while still getting excellent coverage.

Lucky for you, here at Clovered, quoting is our specialty. We even have a free quoting tool you can use to get quotes for policies tailored to your needs in just minutes. If you prefer to chat with someone about your quote, you can contact one of our licensed agents at 833-255-4117 or [email protected].