Home Insurance in Alabama

WRITTEN BY: Amelia Ciffone

UPDATED: MAY 24, 2022 | 3 MIN READ

Most accidents occur in the home – and many accidents can occur to a home as well. To protect your home from unexpected emergencies like storm damage, fire, and theft, home insurance can be one of the most important purchases you make. It’s also an expensive purchase, with costs and coverage that vary widely from state to state. Alabama is an expensive state for home insurance, with potential gaps in flood insurance vital to a state threatened by hurricanes and tropical storms. Arming yourself with information is the best way to find quality home insurance in Alabama. What kind of coverage do you need, and what can you get? What are good rates? Knowing the answers to these questions is an essential first step.

  • Fun Fact: Alabama is home to a tree that literally owns itself. William Henry Jackson granted the tree self-ownership upon his death because of his fond childhood memories of it.

Average Rates in Alabama

Alabama can be an expensive state to buy homeowners insurance in. According to the Insurance Information Institute’s 2017 findings, the average homeowners insurance premium rate in Alabama is $1433, making it 12th in the nation for most expensive premiums. This is $60 above Arkansas premiums (ranked 13th in the nation) and $85 more than Minnesota (ranked 14th).

Renter’s insurance is also more expensive in Alabama. The state ranked 3rd in the nation for highest renters’ insurance premiums at $235. This is $55 more than the national average of $180 premiums, and only $1 less than Oklahoma, ranked 2nd.

Alabama Legal Insurance Requirements

It’s universally known that there are no official legal requirements for homeowners insurance on either a state or a federal level. However, depending on whether or not you have paid for your home and property with a mortgage or not will make a difference. If you still owe money on a home loan, it’s likely that the bank you owe that money to will mandate that you purchase home insurance coverage. If you own your home outright, however, you can get away with not purchasing homeowners insurance – although that’s likely to be a very expensive gamble that you will lose. 

Common Risk Factors in Alabama

From June through November is Alabama’s hurricane season, and a dangerous time for property owners. Alabama was hit by four out of ten of the most expensive hurricanes in US history, and most of these within the last five years. Hurricane Michael made landfall just two years ago in 2018, leading to an estimated $6.23 billion in insurance claims nationwide. With more people living on Alabama’s coasts every year, the need for flood and windstorm insurance is growing.

Most home insurance packages in Alabama do not cover flood damage. However, the Alabama Insurance Underwriting Association (AIUA) helps provide property and windstorm insurance to coastal areas of Alabama. Not only that, but they have a deductible that applies solely in the event of a hurricane.

Even if you don’t live by the coast, you have some options for obtaining flood insurance in Alabama. You may qualify for flood insurance through the National Flood Insurance Program depending on where you live, and if you live in a flood plain, your lender should require flood insurance.

Homes in Alabama also risk damage from frequent wildfires and tornadoes – in 2019 Alabama ranked 10th in the nation for most wildfires, and 7th for most tornadoes. Unlike flood insurance, damage from fires and tornadoes are typically covered by home insurance packages.

Insurance Demographics/Statistics in Alabama

Insurance companies make several calculations when setting their insurance premiums. They consider not only the overall value of a home, but the risk that a home will be damaged based on its location. They may even factor in things like your income level and education to determine if you’re more or less likely to file an insurance claim. When looking into buying home insurance, it can be useful to understand more about the following criteria.

Your Home’s Value

When insuring your home, you can either insure for replacement cost or actual cash value. Replacement cost is essentially how much it would take to rebuild your home using similar materials – most insurers require purchasing enough coverage for 80% of your home’s replacement cost. Insuring for actual cash value, on the other hand, means you’re insuring for the money it would take to repair your home from normal wear and tear. For both of these insurance types, looking at your home’s market value can give you a general idea of what your premiums may look like. The more expensive the home, the more expensive the premiums!

In Alabama, the median home value is $143,072. This is significantly lower than the national median home value of $248,857, and can mean lowered premiums.

Local Crime Rates

All basic home insurance packages in Alabama offer protection against property crimes like theft and vandalism.  Higher-risk homes that live in areas with high property crime rates can also have higher insurance premiums. According to the FBI’s Uniform Crime Reporting Program, the average property crime rate in Alabama in 2018 was 2,548.9 per 100,000 people. This is a bit higher than the national average of 1,970.6 property crimes per 100,000 people.

Your Income and Education

Insurers use crime rates to determine how likely someone is to make an insurance claim. They look at income and education levels for a similar reason: certain demographics are considered “higher risk” for filing insurance claims. As with car insurance, things like good credit and a college degree can potentially lower the cost of the insurance premiums you pay.

According to the Census Bureau, the median household income in Alabama from 2014-2018 is $48,486. This is lower than the national median income of $63,179. Overall education level is lower in Alabama, with 24.9% of people above age 25 having earned a Bachelor’s degree or higher, compared to the national 32.06%.

Where To Purchase Home Insurance in Alabama

You’ve taken the first steps towards buying great home insurance in Alabama. To get the perfect plan at the perfect price, all that’s left is to compare different insurers. AgileRates.com can help you find accurate quotes for insurance tailored to your needs. According to the Pulse Whitepaper from iii.org, only 44% of homeowners compare prices of different insurers at renewal time every year, and only 17% do so online. That means more than half of all homeowners are leaving money on the table at renewal time. Keep that money in your pocket and use agilerates.com online form to get matched with a local agent, get free quotes, and shop around!