Alabama homeowners insurance

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Alabama homeowners insurance guide

Almost 70% of the more than 5 million people who live in Alabama (AL) live in a home their family owns. With an average value of $157,100, damage to Alabama homes from fires, crime and natural disasters represent a significant financial risk to homeowners in the state. Purchasing Alabama homeowners insurance protects your family from this risk.

Alabama home ownership risks

Alabama ranks in the top 10 states with most hurricanes in the United States, including some of the costliest hurricanes in U.S. history in terms of property damage. In addition to damaging winds, Hurricane Ivan in 2004 and Hurricanes Katrina and Rita in 2005caused significant flooding in the state. Alabama gets about 56 inches of rainfall per year, which creates a risk of flooding due to overflowing rivers and flash floods.

Hurricanes and other severe storms can generate tornadoes that also pose a significant risk to Alabama homes. There were 98 tornadoes in Alabama in 2022, which exceeded the state's 10-year average of almost 60 tornadoes per year. The majority of the state's tornadoes occur in March through early May, with April being the most active month.

Wildfires are also a concern in the state, with 803 communities being at high or extreme risk and more than 6,600 communities being at moderate risk.

Alabama home insurance coverages

Homeowners insurance combines several types of coverage that protect your home, family and belongings.

Property Damage

The property damage portion of your policy pays to repair or replace your home and personal property when they’re damaged by a covered cause of loss. This coverage usually applies to your home and other structures on your property, such as garages, sheds or gazebos.

Your policy may offer limited coverage for certain kinds of personal property, like computers, silverware, guns, antiques and money. If you have these types of items and want to fully protect them, you may need to purchase additional insurance.

Replacement Cost versus Actual Cash Value

Homeowners insurance policies may provide either replacement cost or actual cash value coverage. Replacement cost is the amount of money it would take to rebuild, repair or replace your personal property at the current market rate.

Actual cash value is the replacement cost of your property, less a deduction for depreciation. Actual cash value policies are less expensive, but if you file a claim, the money you receive may not be enough to fully replace or repair your property.

Additional Living Expenses

Most homeowners insurance policies include coverage for additional living expenses that arise from damage to your home in the case of a covered cause of loss. For example, if you need to stay at a hotel while you wait for repairs to your fire-damaged home, your homeowners insurance may cover the cost of meals and accommodation.

Personal Liability

Liability coverage protects you and your family if someone sues you because of injuries or property damage that your negligence caused. However, it does not cover liability arising from the operation of a motor vehicle or business.

Medical Payments

Homeowners insurance usually includes Medical Payments coverage, which pays for the medical expenses of a person injured by a pet or member of your family. This coverage does not pay for injuries to anyone who is part of your household.

Flood Insurance Policy

Alabama's location on the Gulf Coast makes flood insurance coverage particularly important, but most homeowners policies exclude coverage for floods. Flooding is the state's second most common natural hazard, with floods happening about once almost every two weeks. If you need flood coverage, you have to purchase it as a separate policy from a standard insurer or as a policy from the National Flood Insurance Program.

Wind Insurance

Alabama homeowners living in coastal areas may need to purchase a separate policy for wind insurance as well. If your homeowners insurance policy excludes wind coverage, you may be able to purchase a policy through the Alabama Insurance Underwriting Association.

Earthquake and Sinkhole Coverage

Sinkholes and earthquakes are not common occurrences in Alabama, but it’s one of the high-risk states in the U.S. for sinkhole damage. Because most homeowners policies exclude this coverage, you may want to consider a separate policy or endorsement to add this kind of coverage.

How much is homeowners insurance in Alabama?

The average annual cost of homeowners insurance in Alabama is $1,921 per year, which is 37% higher than the national average. This makes Alabama the 8th most expensive state in the U.S. for homeowners insurance.

The carrier you choose for your policy impacts how much you pay for homeowners insurance. Find the best rate on the coverage you need by comparing quotes from different insurance companies with VIU by HUB.

Factors that affect Alabama homeowners insurance rates

A variety of factors can affect how much you pay for homeowners insurance in Alabama.

Your home

The value of your home, which is based on its contents and the materials with which it was constructed, impact the cost of your insurance. The more your home is worth, the higher your home insurance premium will be because of the higher cost to repair or replace it. Additionally, homes constructed from materials like wood, that are susceptible to damage, are more expensive to insure than homes built from more damage-resistant materials, such as brick.

The age of your home can also affect your rates. Older homes can be more expensive to insure because they may have higher risks, like out-of-date wiring or plumbing.

Local fire protection

The further your home is from a fire department or fire hydrant, the more your insurance will tend to cost. Additionally, the quality of your local fire department is a factor that underwriters consider.

Location

High-value homes in expensive cities, or in areas with high crime rates, tend to cost more to insure. Similarly, homes in coastal areas with a higher risk for damage from hurricanes may cost more as well. Mobile is one of the most expensive cities, with an average annual premium of $2,014. Birmingham is one of the least expensive, with an average of $978 per year.

This information is intended for general informational purposes only and is not intended to constitute legal advice.