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Alabama Car Insurance Laws & State Minimum Coverage Limits

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Eric Stauffer is a former insurance agent and banker turned consumer advocate. His priority is to help educate individuals and families about the different types of insurance they need, and assist them in finding the best...

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UPDATED: Mar 20, 2020

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Alabama State FlagAlabama law mandates that every driver on the road carry a minimum amount of car insurance. Like most states, these financial responsibility laws are in place to make sure that everyone on the road can pay for damages they cause as the result of negligence or driving errors; this protects both the injured party and the responsible party from financial problems.

Mandatory Coverage

Alabama drivers are required to carry liability insurance that meets certain basic levels of coverage. These amounts cover injuries and death in a crash as well as property that is damaged. The legal minimums are:

  • Bodily Injury Liability in the amount of $25,000 per person and $50,000 for all persons injured in a single incident
  • Property Damage Liability in the amount of $25,000 for damage to another person’s vehicle or any other property, or for damage to public property

While these are the limits you are required by law to have, most people choose to carry more coverage in order to ensure protection from the potentially high costs of auto insurance. Additionally, there are a number of other coverage options that Alabama drivers can select in order to create a comprehensive auto insurance policy.

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Optional Coverage

Alabama insurance companies offer a number of options that can be added to a liability policy to create what is known as a full coverage insurance policy. These options may vary by company but the basic and most common ones are:

  • Collision Coverage, which pays for damage to your vehicle in the event of an at-fault accident. This coverage usually comes with a deductible.
  • Comprehensive Coverage, which provides benefits for a wide variety of events that are not related to a collision. Among the covered items are theft, vandalism, weather and fire damage. There is usually a deductible for this coverage as well.
  • Uninsured/Underinsured Motorist is a coverage that pays for damages caused by another driver who either has no insurance or does not have enough insurance to pay for the damages caused.
  • Medical Payments is a coverage that provides a small benefit for any medical need after an accident for you or anyone in your vehicle. It can also apply to pedestrians who are a part of your family injured in an accident.
  • Rental Car Reimbursement is a coverage that provides benefits to pay for a rental car during a covered loss.
  • Towing and Labor covers roadside assistance and the cost to have your car towed after a breakdown or other roadside problem not related to an accident.

Various insurance companies may also have other options available for purchase, as well as add-on benefits that allow drivers to select exactly the right coverage for their needs.

Proof of Financial Responsibility

Alabama law requires that all drivers not only have insurance but provide proof of coverage. In response to a high level of uninsured drivers on the roads, Alabama introduced an electronic system of insurance policy reporting in 2013 that allows officials issuing license plates to verify insurance coverage with the Online Insurance Verification System. Drivers will also have the option of providing their own proof of insurance if the database does not show a match, but license plates can’t be issued unless insurance can be verified.

The same electronic system can be used by law enforcement during traffic stops to ensure that vehicles have the required insurance. All drivers are also required to have proof of insurance in the vehicle at all times and present it to law enforcement upon request.

The Alabama DMV may request that a driver provide proof of insurance when:

  • Registration of the vehicle has been suspended
  • A driver has been convicted of violating the financial responsibility law
  • Driving privileges have been suspended or revoked

There are penalties for driving without the required amount of insurance coverage. These include:

  • Fines of up to $500 for a first offense
  • $1000 for the second offense and/or a driver’s license suspension of 6 months
  • Suspension of vehicle registration
  • Reinstatement fees of $200 for the first offense and $400 for the second offense after a mandatory 4-month suspension

After a conviction for driving uninsured, proof of insurance is required in order to reinstate driving and vehicle registration privileges.

Shopping for Car Insurance in Alabama

Alabama car insurance rates are just below the national average, according to a 2017 Insure.com study. That puts Alabama right in the middle, with drivers paying rates that are neither particularly high nor particularly low. The state was ranked as 30th with an annual average premium of $1226. The national average at the moment is $1318. That’s generally good news, as drivers can expect to obtain some very reasonable rates with a good driving record and discounts, as well as shopping around for car insurance.

The Alabama Department of Insurance provides a series of auto rate comparisons for several different scenarios to help consumers with their hunt for good rates. There is also a database of licensed insurance companies to allow a search for company information.

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Insurance for High-Risk Drivers

Some drivers may not qualify for insurance in Alabama’s open market as the result of problems on their driving record. These drivers are considered to be high-risk and may be turned down for insurance if they do not meet the underwriting requirements of most insurance companies.

High-risk drivers in Alabama have the option of turning to the Alabama Auto Insurance Plan, an assigned risk plan that requires insurance companies to provide coverage for high-risk drivers by spreading the risk across all companies. This is a last-resort option for those who can’t find coverage elsewhere, and will still come with very high rates – however, it does allow every driver to get the coverage they need.

Teen Drivers in Alabama

Like most other states, Alabama uses a Graduated Drivers Licensing program to help teens develop the skills they require to become good, safe drivers. This system has teen drivers go through several stages each with its own restrictions.

Learner’s Permit

This is the first stage of the GDL is the learner’s permit, which allows a teen of at least 15 years old to drive while supervised in preparation for the license test. With a permit, a teen can drive as long as there is an authorized driver over 21 in the passenger seat at all times.

Restricted License

After at least 6 months with a learner’s permit, a teen of at least 16 years of age can take the road test to obtain a restricted license. With this license, teens can drive unsupervised, under the following restrictions:

  • Driving is not permitted between midnight and 6 a.m. unless accompanied by a licensed driver over the age of 21, a parent or guardian, or for approved school, religious, or employment reasons
  • No more than one passenger is permitted in the vehicle at one time
  • The use of handheld devices is prohibited

Unrestricted License

At the age of 17, after at least 6 months with a restricted license, Alabama teens can apply to graduate to the full, unrestricted license.

Alabama teens are required to adhere to financial responsibility laws as soon as they receive a license to drive unsupervised. Most teens choose to be insured under the policy of a parent or guardian and can remain insured this way throughout college, as long as they maintain the same home address.

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About Eric Stauffer

Author: Eric StaufferI am a former insurance agent and banker turned consumer advocate. My priority is to help educate individuals and families about the different types of insurance they need, and assist them in finding the best place to get it.

3 Comments

  1. My son just got his driver’s license on 5/10/19.

    He got his learner’s permit at 15 and he was in Driver’s Ed @ school and passed that and got his certificate.

    We called our insurance to add him and they quoted us $2337 and would just be my husband truck and that mine would be more that the $2337.

    We were told because we have newer vehicles that’s why it was high.

    These vehicles are not his vehicles. They are our vehicles and our names. He will not be the primary driver’s we will.

    He will drive occasionally and like Emergency situations.

    He will NOT have complete access whenever he wants to drive our vehicles.

    We already pay over a little over $1000 for both vehicles.

    And we have to pay $2337 extra for him to drive my husband truck and not mine. This is absolutely crazy.

    I will not add him to our insurance so he just won’t drive.

    But that’s sad he won’t be able to become a better driver because of the higher cost of insurance just to add him.

    We can’t afford that for insurance.

    And even if we added him to my husband’s truck he’s gone and works out of town and is never home so it would be a waste of money.

    My vehicle is the one that would be available to him to drive.

    I guess a question I have is can he drive my vehicle with me in the car with him without adding him to my insurance?

    We follow the laws. We don’t intentionally break laws so if that not an option then he just won’t drive.

    We live in Alabama if that helps. Our Agent suggests we buy him an older used car.

    But we will not do that. He will work for his own car if he wants one. We are old school.

    My parents didn’t buy me a car. I drove what was available and when my dad sold that I didn’t have anything to drive.

    Reply
  2. I have a 17-year-old daughter that is moving to ALA in December to stay with her sick granny. She has a car and is insured with me on my car ins but when she moves, is she going to have to get ins on her car in Ala, and can she at 17 years old?

    Reply
    • Hi Eddie,

      That is a good question, and it will depend on the insurance company. I would start by contacting yours and seeing what they have to say. Since she is a minor, you may need to set up a new policy in her grandmother’s name, and add her as a driver.

      Best,
      Eric Stauffer

      Reply

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