Average Annual Premium
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There’s good news and bad news for Alabama residents: Alabama is one of the more expensive states for homeowners insurance — the state’s frequently-occurring natural disasters can drive up premiums. But you can still find affordable options in the Yellowhammer State. Here’s how to get the best policy for your property.
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The Best Home Insurance in Alabama
- Allstate: Best overall
- Alfa Insurance: Cheapest
- Farmers: Claims Responsiveness
- USAA: Best for military personnel
- The Best Home Insurance in Alabama
- Homeowners Insurance in Alabama Overview
- Average Annual Homeowners Insurance Premium in Alabama
- How are Homeownersowners Insurance Rates Determined?
- Homeowners Insurance Coverage Explained
- Inclement Weather and Nature-related Risks in Alabama
- Most Affordable Cities for Homeowners Insurance in Alabama
- Most Expensive Cities for Homeowners Insurance in Alabama
- Best Homeowners Insurance Providers in Alabama
- Compare Your Options for Homeowners Insurance
- Frequently Asked Questions
Homeowners Insurance in Alabama Overview
You can own a home without homeowners insurance — but not if you have a mortgage. Your lender will require you to get a homeowners insurance policy to protect it because your home serves as collateral. (Collateral means that if you stop paying on your mortgage, your lender can repossess your home.)
Tornadoes, hurricanes, floods and thunderstorms are all risks in Alabama, so it’s important to understand what your coverage includes, how it’s determined and how much it should cost.
Average Annual Homeowners Insurance Premium in Alabama
Homeowners in Alabama pay an average annual premium of $1,386 for home insurance. This is partially because Alabama is also one of the top 7 states that’s prone to sinkhole damage. Common standard discounts that may apply to you include:
- Multi-policy discounts: Most insurance companies offer discounts if you have multiple policies with them, such as auto and home insurance.
- Safety feature discounts: You could earn a discount on your policy if you install an alarm system or smoke detectors in your home.
- Claims-free discounts: You’ll receive a discount if you go for several years without making a claim against your policy. The number of years and discount percentage varies by provider.
- Group discounts: Professional groups and organizations sometimes make deals with insurance providers to offer lower rates to their members. If you’re a union member, firefighter or member of a professional organization, discuss group discount options with your local representative.
How are Homeownersowners Insurance Rates Determined?
An insurance company will review several key pieces of data to determine your premium as they prepare a quote for a homeowners insurance policy.
First, an insurance company will assess your home’s risk. The age and location of your home influences the rate you’ll pay. Newer homes have fewer issues, so homeowners in new homes are less likely to file a claim. Location-specific factors include the neighborhood’s crime rate, your proximity to a fire station or hydrant and local weather phenomena.
The company also reviews your own risk profile. It’ll pull your credit score to help determine whether you’ll be likely to pay your premiums — the cost of insurance often increases if you have a lower credit score.
Your insurance company may also charge you a higher rate if you’ve ever filed a home insurance claim in the past. Your age, grades (if you’re in school) and the number of family members on your policy are other factors that may influence your risk profile.
You can lower your rate by choosing a higher deductible. The deductible represents how much you pay out of pocket for an insurance claim before your coverage is applied. That way, the insurer would have to pay less when you file a claim.
Homeowners Insurance Coverage Explained
Homeowners insurance protects your home in case of an accident, a disaster, theft or other damage. Common coverage options include:
- Dwelling coverage: The core of home insurance, dwelling coverage takes care of repairs or rebuilding if damage is the result of a covered loss. This category includes critical home components such as plumbing, electrical wiring or HVAC system damage.
- Liability insurance: Liability insurance covers the costs if a family member injures another person or if someone is injured on your property. It also covers you if you or a family member has caused damage to another person’s property. The amount of liability coverage that you need depends on the size of your home and the assets you want to protect.
- Other structures: This clause covers a shed or garage on your property when a covered incident causes damage to these structures.
- Personal property coverage: Personal property coverage takes care of personal property such as clothing, electronics, furniture and jewelry that is damaged or destroyed by a covered cause.
- Loss of use: Loss of use coverage pays your housing and living expenses if you have to temporarily move out while your home is being repaired after damage.
- Guest medical coverage: Guest medical coverage pays another individual’s medical bills and related expenses if he or she is injured on your property.
Additional coverage options that can be purchased separately include:
- Identity theft protection: Many insurance companies have started offering identity theft protection coverage, which pays for the costs associated with reclaiming your identity, obtaining new identification documents and more.
- Earthquake coverage: Standard homeowners insurance policies don’t include earthquake coverage. Consider purchasing a rider for earthquakes if you live on a fault line or in an area prone to tremors.
- Flood coverage: Your mortgage lender may encourage you to get flood insurance if your home is located on a flood plain. Talk to your insurance agent about the flood risks in your area to decide if this coverage is necessary.
Inclement Weather and Nature-related Risks in Alabama
Homeowners along Alabama’s Gulf Coast region are more severely affected by disasters, but residents throughout the state still pay higher rates for home insurance.
For example, Hurricane Katrina cost insurers $16.3 billion in flood insurance losses, and hurricanes since then have added billions to that amount. A storm surge could damage up to 58,000 single-family homes in Alabama and up to $1 billion of coastal property could be at risk. These known risks contribute to a higher-than-average annual cost for homeowners insurance.
Most Affordable Cities for Homeowners Insurance in Alabama
Want to live in an area with low home insurance rates in Alabama? The following cities have the most affordable insurance options:
Most Expensive Cities for Homeowners Insurance in Alabama
The most expensive cities for home insurance in Alabama are:
- Phenix City
Best Homeowners Insurance Providers in Alabama
We crafted a list of the best home insurance providers in Alabama. We weighed cost, the depth and breadth of coverage, riders and other factors. These 4 take the prize for best insurance in Alabama.
- Ease of online service or through an agent
- Clear claims process
- Useful mobile app
- Average customer satisfaction for claims
- Optional coverage like yard and garden not available in every state
1. Best Overall: Allstate
One of the largest homeowners insurance companies in Alabama, Allstate offers a wide selection of policies and coverage.
You can create a policy tailored to your needs with various customized options, such as identity theft restoration and water backup riders. Few insurance companies allow you to pick and choose to create a policy, but this option is especially important in a state where homes face unforeseen risks.
You’ll also have access to a Digital Locker tool to catalog photographs of your belongings. This simple, free feature allows you to prepare for the worst-case scenario.
2. Cheapest Homeowners Insurance in Alabama: Alfa Insurance
Alfa Insurance offers Alabama’s cheapest homeowners insurance. Alfa provides basic policies in association with the Alabama Farmers Federation and offers a wide range of discounts for its customers.
Are you a young homeowner whose parents have a policy with Alfa? You could qualify for a legacy discount of up to 20% off. Homeowners built with materials that stand up better to hurricanes and other natural disasters also qualify for discounts.
Install safety devices (such as smoke alarms), bundle policies and go claims-free for several years to reduce your premiums.
You can also buy home systems protection for just $43 per year. This option covers everything from your broken garage door opener to well pump repairs and will even reimburse up to $10,000 of spoiled food due to equipment failure. Alfa Insurance has an A+ Better Business Bureau rating, and its local expertise can’t be beat.
3. Best for Claims Responsiveness: Farmers
You don’t want to fight with your insurance company about coverage when a tornado or hurricane hits your home. Farmers Insurance has developed a mobile claims center to provide its customers with immediate help after a disaster.
- Prepackaged options that make buying easy
- Other lines of insurance available
- Above-average claims service and accepts prior claims
- Accepts rural properties
- Below-average customer service ratings
- Must buy coverage through an agent
The mobile claims center travels throughout the country to the scene of natural disasters to help customers file claims. On-site agents assist you to file claims even if you lose your paperwork in the disaster.
Farmers can print checks and transfer funds to help you pay for hotel rooms or other temporary housing and even feeds you if you’re affected by a disaster.
4. Best for Military: USAA
Alabama houses a large population of current and former service members — it has one of the highest military enlistment rates in the country. The United Services Automobile Association (USAA) covers the military’s insurance and banking needs.
USAA is known for its excellent customer service and low premiums.
The company deposits directly into the accounts of customers who have a USAA bank account and its homeowners insurance policies pay out 100% of the replacement cost instead of deducting depreciation from a home’s value.
Compare Your Options for Homeowners Insurance
It’s important to comparison shop for the best option in Alabama. Consider your home’s location, your risk appetite and any applicable discounts to find what you need from an insurance provider. Then, request quotes from several insurers and evaluate cost and coverage options before you make a final decision.
Frequently Asked Questions
1) Q: What does home insurance cover?
Most modern home insurance policies cover your home for nearly all risks. However, every policy has exclusions, among which you’ll find things like neglect, wear and tear, and ordinance or law. Land movement, including earthquakes, and floods are excluded as well but can be insured with a separate policy. Personal property and liability coverage is also part of most home insurance policies. Get the best policy quote here.
2) Q: How does home insurance liability coverage work?
Most home insurance policies provide liability coverage that can help protect you and your family against several types of lawsuits or liability claims. Coverage limit options usually begin at $100,000 and can go as high as $1 million. Your liability coverage provides coverage for common mishaps, like slip and fall accidents or animal bites and can protect you even when you are away from home. However, home insurance liability coverage does not provide coverage for automobile-related liability or liability related to business activity. Get the best home coverage and policy through our top providers today.
Q: I’m selling my house. When should I cancel my home insurance?
Most agents will recommend that you keep coverage in place until the day after your closing. Home insurance policies usually have an effective date and time that begins and ends at 12:01 AM. This means a policy that expires on the 1st of the month is only insured for 1 minute of that month. Keeping your policy in effect until after your closing ensures that the home you are selling is still insured.