If you are a resident of Alabama, and you drive a car on Alabama roadways, you have to carry auto insurance. The Alabama Motor Vehicle Division requires all drivers to carry at least the minimum limits of car insurance at all times, and provide proof of insurance coverage when stopped by an Alabama peace officer.
Although auto insurance is mandatory in Alabama, maintaining coverage can be expensive. Fortunately, there are several ways you can reduce your car insurance costs while meeting your state’s legal requirements.
First, keep in mind that Alabama only requires drivers to carry minimum liability coverage limits. Your policy must provide $25,000 of protection for one person who is injured in an accident, and $50,000 for injuries to more than one person resulting from a single accident. It must also provide $25,000 for property damage – that is, damage you cause to another person’s car or personal property.
Your insurance agent may suggest that you carry liability limits higher than the minimum amounts required by the Alabama Motor Vehicle Division. Higher limits provide additional protection against lawsuits for medical bills and property repair; however, higher limits also cost more money each month. If you are on a limited budget, carrying the minimum limits can help you save money on your insurance premiums.
Your agent may also offer additional coverages. Insurance companies typically offer medical payments coverage, which helps offset your health insurance deductible if you are injured in an accident. They also commonly offer other coverages, such as rental car coverage and accidental death and dismemberment. Each of these optional coverages increase your premiums. You should talk with your agent to determine if these coverages are appropriate for your financial situation before agreeing to purchase them.
Physical damage is another coverage that your agent will likely want you to buy. This coverage pays to fix or replace your car if it is damaged in an accident, stolen, vandalized, or damaged as a result of a collision with an animal. If you have a relatively new car, or are still making payments on a lease or loan, this coverage can protect you against heavy financial loss. However, if you drive an older car with a low market value, skipping physical damage coverage can help you save money on your Alabama auto insurance premiums.
Even if you need optional coverages and higher liability limits on your Alabama auto insurance policy, there are still ways you can obtain the cheapest coverage possible. You can opt to work with an independent insurance agent, who represents several different insurance companies. An independent Alabama insurance agent can obtain quotes from multiple companies, and can help you compare the quotes to ensure you get the best coverage for the least money. Another advantage of working with an independent agent is that you typically will only have to fill out one application, and the agent will do the rest of the work for you.
Alabama car insurance companies offer a variety of deductibles on physical damage coverage. Although your agent may recommend a low deductible to minimize your cash outlay if your car is damaged, a low deductible corresponds to higher premiums. If you can reasonably afford to pay $500 or more out of pocket if you have an accident, or if your car is stolen or vandalized. You can select a deductible of $500 or more and reduce your physical damage premiums by up to 10 percent.
Finally, ask your auto insurance agent about discounts that can help you save money on your premiums. Alabama allows car insurance companies to provide a variety of discounts to qualified policyholders. For example, if you decide to insure more than one car on the same policy, you might be able to save about 10 percent on your total policy premiums if the company offers a multi-car discount. If the company also offers homeowner’s insurance, and you own your home, you can save 5 percent or more by insuring your car and home with the same company. Also, if you voluntarily take a driver improvement course, your insurance company may offer a discount; however, they will usually not offer this discount if you were required to take this course by an Alabama court or police department.